Indicators of distress within UK business at record lows

Research conducted in April this year found that just 10% of businesses are experiencing falls in profit, whilst only 11% are experiencing falling sales. R3 said that only 6% of companies surveyed reported reductions in their market share. Fewer than one in 10 UK businesses are using their maximum overdraft (8%) or making staff redundant (6%), it said.

The R3 study found that smaller companies are showing more signs of distress than larger businesses but that they are in a healthier position than they were last year. It said a fifth of sole traders reported at least one sign of distress in April, compared to half in a similar study carried out in November 2014.

However, R3 warned that its research showed that growth in the UK economy is slowing. One indicator of this is the fact that only 27% of businesses surveyed in April said they are investing in new equipment. In October 2013, 42% of businesses were making such investments, R3's research at the time found.

"While the level of growth has returned to its peak, the pace of growth is weakening slightly," R3 president Phillip Sykes said. "A higher number of businesses are seeing at least one indicator of growth but fewer are experiencing multiple growth signals."

Nearly half of UK companies (47%) said they expect their business activities to increase next year, but 48% said they expected there to be no change. Just 4% of businesses said they expect their activities to decrease next year.

Sykes said: "Looking ahead, businesses face a mixed picture. Although the likely date of an interest rate rise continues to be moved further into the future, a rise will come eventually. The Bank of England’s growth outlook remains solid but has been downgraded. And a referendum on British membership of the EU could cause uncertainty for business."