The number of firms in significant financial distress in Wales rose sharply in the final quarter of 2020, shows new research from Begbies Traynor.
The latest Red Alert research for the insolvency firm showed 19,311 firms in significant distress – an increase of 25% on a year earlier.
It was also 11% up on Q3 of 2020, More than a quarter of the struggling businesses – 5,317 – are in Cardiff and Swansea.
UK-wide, there are 630,000 businesses in significant distress, up 27% year-on-year, with all sectors monitored by the research reporting an increase in financial difficulty.
In Wales, businesses in some sectors faced greater financial difficulty than others, including manufacturing and travel & tourism, which both increased by 22%, and leisure and cultural, which increased by 18% between Q3 and Q4 2020.
Huw Powell, managing partner at Begbies Traynor across South Wales, said, “These figures give an insight into some of the financial stresses that have been building in Welsh businesses over the last year.
"Many businesses have been dealt another body blow by the latest lockdown. 2020 was a devastating year for thousands of businesses as they fell deeper into financial distress and Q1 2021 seems to be offering little hope of an upturn in the market.
"The UK Government’s extended furlough and financial support measures will provide some relief and certainly save a significant number of businesses from entering into insolvency in the short term, however this simply won’t be enough to save every business.
“Although the UK’s announcement of a trade deal with the EU and the roll-out of Covid-19 vaccines offer some light at the end of a very dark tunnel, it is likely to be some time before we see any sort of recovery.”
