Yorkshire hotels hit by fall in consumer spending
DISTRESS LEVELS among Yorkshire hotels, restaurants, pubs and retail operators rose in August as they get to grips with a marked fall in consumer spending.
Research from insolvency body R3 shows that consumerfacing sectors in Yorkshire, such as hotels, restaurants, pubs and retail, all saw more businesses at higher-than-normal risk of insolvency in August.
R3 said this reflects recent data which indicates that consumer spending has been falling for the last three months across the UK.
In August the number of hotels in the region at above-normal risk grew by four per cent, taking the figure to 19.5 per cent, or almost one in five hotels. However this is slightly better than the national average of 20.6 per cent at risk.
Retail also struggled with 26.2 per cent of shops in Yorkshire at higher-than-normal risk, a rise of 3.6 per cent. This represents nearly 3,500 of the 13,300 active retail businesses in the county and was marginally worse than the UK-wide level of 25.3 per cent of retailers at risk.
Pubs in the region saw a 2.3 per cent increase in those at above normal risk, representing 21.6 per cent of pubs compared with 22.3 per cent across the UK.
Restaurants fared slightly better with a rise of just 1.4 per cent since the previous month, representing 23.5 per cent of restaurants compared with 23.1 per cent nationally.
Yorkshire was close to the national average levels of businesses at risk in most other sectors including manufacturing, technology and IT, construction and professional services. The only sectors in which the region underperformed compared with other regions was tourist operators, where 30.6 per cent are deemed to be at risk in the region compared with a UK average of 28.6 per cent, and transport and haulage, which have 43.7 per cent of businesses in the negative band – significantly above the UKwide average of 33.5 per cent.
However, the region continued to perform strongly in agriculture, with just 19.2 per cent at risk compared with 21.3 per cent nationally.
Overall, more than 63,000 businesses in Yorkshire were deemed to be at higher-than-normal risk of insolvency, a monthon-month rise of 3.4 per cent, bringing the level to 28.9 per cent of active businesses in the region, slightly above the national figure of 28.3 per cent.
Adrian Berry, chair of R3 in Yorkshire and restructuring partner at Deloitte LLP, said: “While levels of businesses at risk in Yorkshire generally seem to be in line with the national picture, it is concerning to see distress creeping up throughout the UK and across most sectors, with businesses dependent on household spending being hit the hardest.
“A recent survey from payments company Visa found that UK consumer spending had fallen for the third consecutive month, providing further evidence that people are feeling the impact of wage freezes and growing inflation.
“As ever, our advice is for businesses to keep a close eye on their finances and seek professional advice at the first sign of trouble.”
R3 uses research compiled from Bureau van Dijk’s “Fame” database of company information to track the number of businesses in key regional sectors that have a heightened risk of entering insolvency in the next year.
R3’s research follows a Nielsen survey that shows the number of people who are cutting down on household spending is at its highest level for two years as consumer confidence continues to plummet following the Brexit vote.
More than half of the nation admitted to resorting to cost-cutting measures in the second quarter of 2017, according to Nielsen’s latest Global Survey of Consumer Confidence and Spending Intentions. The collapse in sterling following Britain’s decision to quit the EU resulted in inflation soaring to its highest level for nearly four years in May.