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Close to 4,000 firms weighed down by liabilities

ALMOST 4,000 North East firms are struggling to survive under the weight of their liabilities, according to a new report.

Red Flag Alert, published by Begbies Traynor, found that 3,840 companies in the North East are close to going under, with £58bn worth of liabilities nationally.

The report, which monitors the early warning signs of company distress, found that the North East is showing continuing stability with reductions in the number of businesses experiencing ‘significant’ or ‘critical’ financial distress in Q3 2010.

In fact, there was a decrease of -7 per cent in the number of companies in the region with significant problems compared with the same period last year, close to the national average of -9.5 per cent.

However the report also shows that some of the key industry sectors continuing to suffer in the North East remain construction (13% with significant problems), other B2B services (17%), retail (7%) and property (9%).

Andy Haslam of Begbies Traynor in Newcastle,said: “It will not be until the Government’s Comprehensive Spending Review in a week’s time that we will know for certain the allocation of all of the anticipated £83bn of spending cuts, but we are bracing ourselves for more than our fair share of the pain.

“With confidence in the construction sector falling to an eighteen month low, recruitment activity at its slowest for almost a year and a strong increase in distress in the advertising sector, there is a growing risk that even if the wider UK avoids a double dip recession, public-sector dependent industries face higher levels of financial distress.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .