MORE than 1,600 businesses in the Bournemouth area are now in “significant” financial distress, research has suggested.

And there is a warning that the figure could have been much higher if the lockdown had not led to a drop in court activity.

Red Flag Alert data from insolvency firm Begbies Traynor showed 1,636 local firms in serious distress from April to June.

The figure was up four per cent on the previous quarter and also up four per cent on the same period last year. Across the UK, there were 527,000 companies in significant distress, up 33,000 since the start of the year.

Bournemouth saw support services and real estate suffering worse than other sectors, with the number of struggling firms in those sectors rising by 14 per cent and eight per cent respectively between quarters.

Other sectors showed signs of relative stability – including health and education as well as bars and restaurants – but many businesses could face a further slowdown.

Julie Palmer, partner at Begbies Traynor in Bournemouth, said: “These are undoubtedly the toughest of times for all businesses. While the latest figures from our Red Flag Alert show that there has been a relatively small increase in the number of ailing companies here in Bournemouth over the past quarter, the true picture of financial distress may be concealed by inaction on insolvent and distressed businesses in the courts. This means we are more likely to see the real impact of the pandemic during the second half of 2020.

“There have been unprecedented company support measures from the Treasury during the pandemic, with both the furlough scheme and access to government backed funding schemes. But unfortunately, as the chancellor himself has admitted, not all businesses and jobs can be saved.

“While it is likely that this situation will get worse for many businesses before it gets better, those businesses that have the capital and the management ability will be better placed to adapt to the ‘new normal’. Even before the crisis hit, change had been coming, but the pandemic has increased the pace of this change.

“We have already seen some businesses make significant alterations to their structures and we’ll expect to see more in the coming months. But a crisis can be an opportunity – we’re in for hard times, but if this is a catalyst for change it could result in a better, more sustainable future.”

Companies with “significant” problems are defined as those with county court judgements of less than £5,000 filed against them, or which have been identified by Red Flag’s risk scoring system.