Member Article

Business distress rises in North East

Business distress levels in the North East are continuing to rise, despite a falling trend across the UK as a whole.

Research by business rescue and recovery specialist Begbies Traynor suggests that ‘significant’ problems in the region grew by 15% year-on-year, in the final quarter of 2011.

As the national average in the UK for the same period saw a fall of 10%, North East businesses continue to struggle as instances of significant distress rose from 2,057 in Q4 2010, to 2,367 in Q4 2011.

Instances of ‘critical’ distress appeared to be stabilising with a 2% fall during the same period, dramatically below the 24% UK average.

Andy Haslam, partner at Begbies Traynor in Newcastle, said: “Although the figures show that the North East is still faring worse than most other parts of the UK, it is encouraging that the levels of distress seem to be slowing following the third quarter of 2011 when we saw distress in the region higher than anywhere else in the country.

“The slowing of instances of the more advanced ‘critical’ distress indicates that the worst effects of the public sector cuts have now been felt in the North East although the region is still suffering from the general spread in distress across numerous sectors and regions of the UK economy.

“Even London, which is usually insulated from distress, has seen levels rise significantly, and every industry sector from manufacturing to professional services has now been affected over the course of the past 3 years.”

Business to business support services continued to be hardest hit among the sectors, with a rise of 22% in ‘significant’ problems, followed by the construction sector, where distress rose 12%.

Across the UK professional services were affected, which in the North East remained static at 5%, and hotels and accommodation which experienced a 4% fall.

The largest number of businesses facing ‘critical’ problems, predominantly CCJs over £5,000 or winding up petitions, were in construction, followed by the business to business support sector.

Bars and restaurants saw a rise from 2% to 5% and professional services rose from 2% to 3%.

This was posted in Bdaily's Members' News section by Tom Keighley .