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North East business distress levels steady

Figures released yesterday revealed that the level of business distress in the North East has remained similar to the first quarter of 2011.

The figures also suggested that business distress in the region had fell year on year by 8 per cent.

Business rescue and recovery specialist Begbies Traynor quarterly Red Flag Alert statistics show that levels of business distress in the North East have steadied in the past quarter in contrast to the UK average of a 15 per cent increase year on year.

Across the UK, 186,000 companies are facing ‘significant’ or ‘critical’ financial problems according to figures from January, February and March 2011, a total of 4,498 are based in the North East.

Andrew Haslam of Begbies Traynor in Newcastle upon Tyne,said: “Although the North East remains one of the most distressed areas of the UK, we are once again seeing that levels have remained steady,”

Survey findings show that 4,381 businesses in the region showed signs of ‘significant’ business distress in the first quarter of 2011, similar to the Q1 2010 level of 4,739.

Mr Haslam, continued:“ The figures show the impact of seasonal trends, retail and hospitality businesses are most likely to fail in the first quarter of any year, but that doesn’t account for all of the distress.

“We are seeing a worrying spread of distress across a great number of business sectors with business to business support and professional services particularly hard hit.”

Business to business support services was the sector hardest hit by ‘significant’ problems with 26 per cent of the instances of distress in the region, followed by the construction sector with 16 per cent of the total and property services with 9 per cent, with the balance shared by other business sectors.

He added: “High levels of legal actions taken against debtors indicate that creditors are attempting to maximise cash collection right across their customer base.

“The hike in oil prices and January’s VAT increase has made cash flow and credit control essential priorities for most businesses with some seeking payments through the courts.”

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