THE number of Bournemouth businesses in “significant” financial distress has dipped slightly – but there are signs of “troubles building up in the system”.

Business recovery business Begbies Traynor found there were 1,750 such businesses in the first quarter of 2022, a two per cent drop on the previous quarter.

The number was also a 24 per cent fall on the same period in 2021.

However, professional services firms saw a six per cent rise in significant distress, while telecoms and IT saw an eight per cent increase.

Nationally, Begbies’ Red Flag Alert research found the quarterly count of businesses in significant distress was flat at 581,596. But there was a sharp 19 per cent rise in the number in “critical” distress, driven by a 51 per cent rise in the construction sector and a 42 per cent rise among bars and restaurants.

The number of county court judgements (CCJs) nationally stood at 11,673 in March, up 179 per cent on the monthly average for the previous two years and the highest level in a single month for five years.

Julie Palmer, partner at Begbies Traynor in Bournemouth, said: “While the year-on-year data of companies in Bournemouthin significant distress may be encouraging, the critical distress and CCJ numbers highlight troubles building up in the system.

“For the first time in more than decade, inflation is the prime concern for businesses as companies struggle under rising costs.

“However, having ploughed so much money into protecting businesses over the past two years, the government won’t want to see it wasted as companies collapse, unable to repay their debts. Taking a hard line on repaying pandemic funding and other loans would likely drive many businesses over the edge, which no-one wants to see as the economy struggles to recover.

“As such, there needs to be a long-term view. For example, we could see support for businesses through leniency in repaying pandemic funding, or an approach like war bonds, with terms being extended as ministers follow the adage that a rolling loan gathers no loss. “However, any businesses facing financial difficulties, for whatever reason, should seek professional advice in order to fully understand the options available.”

Begbies Traynor, a business recovery, financial advisory and property services consultancy, has been measuring corporate financial distress since 2004.

“Significant” distress describes businesses which have CCJs of less than £5,000 filed against them, or which have been identified by the Red Flag Alert’s credit scoring system.

The term “critical” distress is applied to businesses with CCJs of more than £5,000 filed against them.