UK businesses less distressed than usual

R3 Business Distress measure reports record lows as businesses grow

Businesses in the UK are growing faster than ever and are in somewhat less trouble than has been the case, according to insolvency specialist association R3.

Sixty-eight per cent of businesses surveyed exhibited at least one key sign of business growth in R3's June 2014 Business Distress survey, equalling a previous record with just 35 per cent showing at least one key sign of distress – down slightly from February's record low of 33 per cent.

Giles Frampton, president of R3, added however that the South is pulling even further away from the rest of the UK in economic terms.

"[However,] business growth isn't yet showing signs of decelerating and the pace of the recovery is being kept up," Frampton said.

He added that businesses need to stay alert for signs they are over-stretching themselves as growth must be sustainable.

"Sales, profits, and business expansion may be on the up, but if a business runs before it can walk, problems can emerge. Logistics, finance, cashflow, and the operational side of a business all need to keep up with business expansion, whether this is geographically or in terms of demand or sales," he said.

More businesses are maxing out their overdraft as well, he noted, in an attempt to keep up.

Regionally, 73 per cent of businesses in the South are reporting at least one sign of growth. This fell to 69 per cent in the Midlands, and 59 per cent in the North.

Thirty-four per cent of businesses in the South and 30 per cent of businesses in the Midlands reported at least one sign of distress, and this increased to 43 per cent of businesses further north.

R3's Business Distress Index tracks symptoms such as profits, sales volumes, market share, use of maximum overdraft, making redundancies, equipment investments, and business expansion. Some 500 business decision makers were surveyed by phone between 2 and 12 June, with responses weighted according to size, location and sector.