MORE than 3,000 Southampton businesses ended 2020 in “significant” financial distress.

Research shows the number of struggling firms was 3,131, up 25 per cent on the same period in 2019, even with the government’s support measures in place.

The number increased by 12 per cent between the third quarter of 2020 and the final quarter.

Sectors under the most stress included real estate and property and the retail industry, according to the figures from insolvency business Begbies Traynor.

Steve Powell, partner at Begbies Traynor in Southampton, said: “These figures give an insight into some of the financial stresses that have been building in Southampton businesses over the last year.

“Many businesses have been dealt another body blow by the latest lockdown. 2020 was a devastating year for thousands of businesses as they fell deeper into financial distress and Q1 2021 seems to be offering little hope of an upturn in the market.

“The government’s extended furlough and financial support measures will provide some relief and certainly save a significant number of businesses from entering into insolvency in the short term. However this simply won’t be enough to save every business.

“Although the UK’s announcement of a trade deal with the EU and the roll-out of Covid-19 vaccines offer some light at the end of a very dark tunnel, it is likely to be some time before we see any sort of recovery.”

Nationally, the Red Flag Alert found 630,000 businesses in significant distress, up 27 per cent year on year.

Southampton saw a 16 per cent increase in the umber of real estate and property firms in greater financial difficulty and a 14 per cent increase among retailers.

The Red Flag Alert firms as having “significant” problems if they face county court judgements or less than £5,000, or are identified by Begbies’ risk scoring system. This looks for deterioration in indicators such as key financial ratios, working capital, contingent liabilities, retained profits and net worth.

The Office for National Statistics last week estimated that retail sales quantities fell by 1.9 per cent in 2020 – the largest year-on-year fall since records began in 1997. High street clothes stores have been hit particularly hard.