UK business distress at 'record' low

Fewer than one in five firms now reporting signs of distress, according to insolvency trade body R3

An insolvency trade body has said that UK business distress levels are at their lowest level since it began its survey almost four years ago.

Just 17 per cent of businesses reported a key indicator of distress in R3's latest survey, down from 28 per cent in September and 64 per cent the first time it conducted the research in March 2012.

Low inflation, coupled with reductions in fuel prices, are helping ease the difficulties on British businesses, R3 said.

Several individual indicators of distress are also at record lows, including regularly using maximum overdraft (six per cent) and decreased sales volumes (10 per cent), R3 said.

Just four per cent of respondents said they were having to make redundancies, two points off the record low for this indicator.

Phillip Sykes, president of R3, says: "The level of businesses in distress has plummeted since our survey began in 2012. This isn't surprising given the current state of the economy.

"There has been a reasonable level of growth in recent years and the record low interest rates have facilitated high liquidity."

Additionally, a new record high of 69 per cent of firms reported at least one growth indicator, R3 found.

However, Sykes struck a note of caution for the year ahead.

"The recent volatility in the stock market, driven by worries over China, could be a sign that businesses might be in for a bumpier 2016," he said.