The latest Red Flag Alert Report for Q2 2013, produce by insolvency specialist Begbies Traynor, says that the number of construction firms in ‘critical’ financial distress has fallen by 48% since Q2 2012.
Across all sectors, UK businesses experiencing 'Critical' financial problems reduced 39% from 4,947 in Q2 2012 to 3,001 in Q2 2013, indicating a significant turnaround in the health of the UK economy. On a quarterly basis, the improvement continued with levels of 'Critical' distress falling 9% from 3,283 in Q1 2013.
However, Begbies Traynor partner Julie Palmer warned that companies often run into difficulties during recovery. She said: "With critical distress levels falling at a record pace, this quarter's improvement appears to be the first real sign that the UK economy has turned a corner towards a sustained recovery. However we have real fears that many SMEs will have serious financial difficulties at the time they least expect – during a recovery. Our experience has shown time and time again that many SMEs run out of cash during the recovery phase, as there is a real temptation to overtrade.”
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