Risk & Economy » Regulation » SMEs struggling despite economic recovery

MORE THAN 200,000 small and medium-sized enterprises in the UK are in financial distress despite the economic recovery, research by business recovery experts Begbies Traynor has found.

According to the latest Red Flag Alert, which monitors the financial health of SMEs, there has been a 22% increase in the number of small businesses suffering from ‘significant’ financial distress compared with the equivalent period last year.

Limited access to funding, the risk of over-trading and increased competition are dragging down SMEs despite the quickening pace of the UK recovery.

SMEs now account for 92% of the 225,549 UK businesses facing significant financial distress with small businesses in consumer facing sectors faring worst over the twelve month period.

The number of general retailers in severe financial difficulty rose 16% year on year to 13,130, of which 97% are classified as SMEs.

“In the worst performing industries such as retail, bars and restaurants, which are highly dependent on levels of consumer spending, smaller enterprises are simply unable to compete with the buying power of larger chains and have struggled to match the discounts offered by bigger competitors seeking to maintain market share,” said Julie Palmer, partner at Begbies Traynor.