Number of SMEs in distress drops by 9.8% in the South East

The number of SMEs in the South-East that are in significant distress has dropped by 9.8% in April-June of this year in comparison to January - March numbers.

The South East number decreased from 128,111 SMEs to 115,613, according to business recovery practice Real Business Rescue's insights for Q2.

Overall in the UK, 69,500 SMEs moved out of significant distress since businesses have been able to open again in April, with the easing of the lockdown.

Despite the number of businesses in distress decreasing, the rates of business insolvency have risen since the easing of restrictions. In the UK, there have been 3,116 company insolvencies in Q2, a 31% increase on the 1,371 insolvencies in Q1.

“This Q2 data represents a different story to what we’ve seen in the last 18 months; portraying a brighter picture with distress levels decreasing thanks largely to lockdown-easing in April and trade resuming for many businesses," Shaun Barton, National Online Business Operations Director at Real Business Rescue, said.

“But while that’s positive, there are two stories to tell here. The second being that corporate insolvencies (companies entering into insolvent liquidation) are on the rise which seems to contradict the overall picture of positivity, but we feel there’s a reason for this. While many businesses opened their doors in April and started getting back on their feet, this led to a decrease in levels of significant distress levels. But some businesses quickly realised they couldn't manage the accrued liabilities over the previous 12-15 months."

Despite there still being 3 million SME jobs in danger in the UK, the data shows a 6% decrease since Q1, where 3.2 million SME jobs were at risk. The lockdown easing has played a major part in helping to stabilise the UK economy, but certain sectors have benefitted more than others. 

Manufacturing in the UK has seen the biggest improvement, with a 9.8% decrease in jobs in danger compared to Q1. Whilst support services saw an 8% decrease, they have the highest number of SME jobs in danger at 518,288 in Q2. 

Rank	Sectors in most danger	% change from Q1 to Q2	SME jobs in danger
1	Support Services	-8%	518,288
2	Health and Education	-9.3%	370,547
3	Construction	-6.6%	249,673
4	Manufacturing	-9.8%	200,753
5	Bars and Restaurants	-6%	200,692
6	Telecommunications and I.T.	-6.2%	185,081
7	General Retailers	-7.3%	159,102

About Real Business Rescue

Real Business Rescue is part of Begbies Traynor Group, a business recovery practice with a workforce of 600 people across more than 100 offices.

Throughout 2019, Begbies Traynor and Real Business Rescue handled more than 1,500 new cases, including liquidations and company administrations.