R3 – the trade body for Insolvency Professionals – has just announced that business growth nears a record high, as UK business distress hits record low.
The trade body has tracked five key indicators of business distress since March 2012 – including decreasing profits; sales volumes, or market share; the regular use of maximum overdraft facilities and new redundancies. Each indicator (as you can see on the adjacent bar chart) measures the share of UK businesses experiencing that particular sign of distress.
In the latest survey, all indicators are at or near record lows as UK business powers ahead.
According to their survey, the share of businesses experiencing at least one sign of distress is now almost half the 64% of businesses in the same position when the survey first started in March 2012.
Commenting on the figures Giles Frampton, R3’s vice-president, said: “Business distress has tumbled over the past two years as businesses have got over the worst of the recession. This has been matched by steadily falling corporate insolvency numbers.
“Historically, business failures increase as the economy bounces back: rapid economic growth can be a problem for a business that used up cash reserves in a recession or that isn’t prepared for expansion. However, low interest rates and the much slower recovery we have had up until the last nine months or so have brought struggling businesses time to sort out their problems.”
R3’s latest survey also found that indicators of business growth remain close to the record highs hit in the last survey in autumn 2013: 65% of businesses are showing at least one sign of growth, slightly down from the record 68% in October 2013, but up from just 46% in March 2012.
Signs of business growth include: investing in new equipment (37%); increased sales volumes (34%); increased profits (30%); business expansion (28%); and growing market share (28%).
Giles Frampton added: “It’s very encouraging that business growth is keeping pace with the record figures we saw in the autumn. The repeat performance of the last survey’s strong figures gives weight to the idea that the economic upturn in the last six months was more than just a blip.
“Growth is still slightly uneven, with some regions much more positive than others, and larger businesses do have more to celebrate than their smaller counterparts. That said, even the poorest performing region in terms of growth – the South West and Wales – is seeing half of its businesses show growth indicators, while almost two-thirds of the smallest businesses are showing signs of growth.”
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