The Red Flag Alert report for Q1 2025, which provides a quarterly snapshot of Britain’s corporate health, shows that instances of early or ‘significant’ financial distress in Northern Ireland grew by almost 5.8% in the first three months of 2025 compared with the same period the previous year, now accounting for over 9,500 firms in the province. This type of distress, which pre-dates the US announcement of trade tariffs in early April and the ensuing global trade war, saw a fall of 12.5% since the last quarter of 2024.
The picture was reflected across the UK with 579,276 businesses seeing signs of significant distress in Q1 2025, a hike of 4.5% in distress levels year-on-year. There was a fall in levels of significant distress of 11.5% across the UK as a whole.
In Northern Ireland, ‘critical’ or more advanced business distress saw a slight uplift of just under 1% in the first three months of 2025 compared with the same period of 2024 with 725 firms in the province affected. In contrast, the UK-wide figure rose by 13.1% year-on-year with over 45,400 companies impacted, while there was a UK-wide drop of 3.1% since the previous quarter compared with a fall of almost 6.6% in Northern Ireland.
Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, said: “Despite some encouraging economic news at the start of the year - with stronger growth than had been predicted and the rate of inflation dropping to 2.6% in March - our latest Red Flag data paints a far gloomier picture with many more businesses in the province already experiencing signs of financial distress.
“Given that the report pre-dates the upheaval caused by the announcement of Trump’s global trade tariffs, many experts fear that the ongoing uncertainty will further dent consumer confidence and push businesses closer to the edge. In such a fragile economic environment, owner-managed businesses must keep a close eye on their finances and seek professional advice as early as possible as this will increase their options for refinance, restructure and revival.”
In the first three months of 2025, among the worst affected sectors in Northern Ireland in terms of early distress since Q1 2024 were: hotels and accommodation (+51.6%); professional services (+14.2%); general retailers (+14%); and food and drug retailers (+12.8%).
The only industry categories monitored by Red Flag Alert to see decreases in significant distress levels in Northern Ireland since the previous year were: printing and packaging (-26.5%): travel and tourism (-19.1%); utilities (-10.4%); and financial services (-10.3%).
Most sectors in Northern Ireland experienced increases in critical distress compared with the same period the previous year, with media (+100%, representing 24 firms), bars and restaurants (+82.6%, representing 42 businesses), and food and beverages (+75%, representing 14 companies), among the worst affected.
Mr O’Hara continues: “With inflation predicted to rise again next month amid escalating household bills, together with a worsening global outlook, this may well be the ‘calm before the storm’. Despite the UK entering the latest crisis in a reasonable shape, businesses are one again unlikely to be able to operate in the stable environment they need, but rather they should be prepared for a rocky journey ahead.”