20th Jan 2014 13:58
LONDON (Alliance News) - Improving business confidence in the fourth-quarter drove strong growth across the UK's core business sectors, according to the Begbies Traynor Red Flag Alert Monday.
Begbies Traynor, which provides professional advice to a range of major institutions, large corporations, SMEs and private individuals, said its Red Flag Alert found that so-called critical distress levels had declined for the third straight quarter across nearly all regions of the UK.
The report found that across all UK business sectors, critical financial distress fell by 1% quarter-on-quarter, boosted by the hotels, food retailing and general retailing sectors and the key Christmas trading period. The sectors experienced increased consumer spending as a result of improving job security and higher property prices.
However, Julie Palmer, a partner at Begbies Traynor, said critical distress levels among general retailers in the fourth-quarter were actually 16% higher when compared with last year's figures.
The latest trading updates from retailers for the key Christmas period highlighted the growing trend of services such as 'click-and-collect' and the importance of a strong online platform to entice consumers.
Several major retailers cited heavy discounting during the festive period as the reason behind falling profits, including FTSE250 department store chain Debenhams PLC, and mother and baby retailer Mothercare PLC.
Meanwhile, the report also found that critical distress levels in financial services fell by 23% over the fourth-quarter.
"After a slow third quarter, the important UK services sectors finished the year strongly with increasing confidence, resulting in improved M&A opportunities, as well as a return of investor confidence due to an improving stock market, providing a boon to the professional and financial services sectors," Palmer said.
But the report wasn't all rosy, as "earlier stage 'significant distress'" across all sectors reached record highs over the fourth-quarter - particularly among small and medium-sized enterprises.
"We are seeing growing fragility particularly among the small businesses community, as smaller and newer companies struggle to keep up as the economic recovery gathers pace," Palmer said in a statement.
"As is common at this stage of any recovery process, businesses with inexperienced management teams or limited credit availability are simply unprepared to step up a gear and fund and execute the business strategies required to remain competitive in a growing market," she added.
By Samuel Agini; [email protected]; @samuelagini
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