North East companies see tough start to 2018 with high risk insolvency rise

According to insolvency trade body R3’s latest business rankings, the majority of North East professional service firms with a high risk of entering insolvency has jumped by seven per cent.

Since December 2017, the number of such firms who could enter insolvency within the next 12 months has gone from 39 per cent to 46 per cent, a staggering increase.

However, the region’s leisure industries are still competing well compared to their UK peers.

The region’s manufacturing sector saw a four per cent point rise in this risk since December 2017, while the North East’s retail and construction sectors’ proportion of firms at greater than average risk recorded a five per cent point increase.

A total of 37 per cent of the nearly 80,000 active firms based in the North East currently have a higher than normal risk of entering insolvency within the next 12 months. This has been compared to 33 per cent at the end of 2017.

But in more positive news, the R3 report has shown that the North East’s restaurant sector is at the top of its sectoral business stability table, while the pub and hotel sectors are in second and third places in respective tables too.

Andrew Haslam, chair of R3 in the North East and head of specialist business advisory firm, FRP Advisory LLP’s Newcastle office, said: “The start of the year can be very difficult for businesses in many sectors.

“Consumers reeling in their spending after the excesses of Christmas, winter weather keeping people indoors and projects often taking their time to kick off or to get fully back up to speed.

“The North East has not been alone in seeing such a significant recent rise in the insolvency risk facing its industries, and it’s clearly concerning that this sort of increase is happening so quickly in many different sectors.

“The regional hospitality industries had a solid end to 2017 and it’s good to see that the momentum they built up has been carried into the New Year, both in terms of their positions in our business stability tables and in the continuing investment being made in opening and improving venues around the region.”