North East businesses in more than half of the 11 industry sectors monitored in insolvency and restructuring trade body R3’s monthly business stability tables are ranked at the top end of their respective lists.
According to R3’s latest research, the region’s restaurant sector is the top performer in its industry table, which compares the proportion of firms in the North East considered to be at a higher than normal risk of insolvency with their peers in the other 11 regions of the UK.
The North East agricultural and pub sector are both ranked second in their respective lists, while the hotel sector comes in third and both the transport/haulage and technology and IT sectors are placed in fourth position.
On the downside, almost half (49%) of the North East’s professional services firms are now considered to be at higher than normal risk of insolvency, compared to a national average of 47%.
The region’s retail sector remains one from the bottom of its sectoral table, ahead only of the South West, with 38% of North East businesses therein having an elevated risk of insolvency compared to a national average of 35%,
Overall, regional firms in seven of the 11 key industries that R3 monitors currently have a better rate of business stability than the national average, with the cross-sector average for all North East industries remaining almost exactly in line with the overall national figure (39%).
The latest Insolvency Service statistics showed a 13% rise in the number of corporate insolvencies in the first quarter of 2018 compared to the last three months of last year, although the latest figures were broadly comparable to the same quarter in 2017.
R3’s insolvency risk tracker is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.
Andrew Haslam, chair of R3 in the North East and head of specialist business advisory firm FRP Advisory LLP’s Newcastle office, says: “No-one is pretending that economic conditions are easy at the moment, and the percentage of firms at higher than normal risk is continuing to rise both here and right across the country, but the performance of many North East industries against their regional peers at least provides some degree of comfort.
“The North East’s leisure industries have generally performed consistently well over the long-term, but this hasn’t always been the case for others that are now near the top of their lists and it’s encouraging to see them getting and staying ahead of their respective national averages.
“The region’s professional services sector has had a tough year, with the 49% of businesses currently having an elevated insolvency risk comparing to just 30% 12 months ago and 35% in September 2017, and the upward trend suggests there could be further increases in the proportion of firms at elevated risk.
“Businesses in any sector can get into difficulty at any time, and it’s essential for owner/managers to maintain a strong grip on their cashflow and management data, so they can act quickly to resolve any issues as soon as they begin to become apparent.”
