Home Business Services North East Transport Sector’s Raised Insolvency Risk Level Third Lowest in UK

North East Transport Sector’s Raised Insolvency Risk Level Third Lowest in UK

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The proportion of North East transport and haulage firms with a raised risk of insolvency is the third lowest in the UK and the lowest for any of the English regions, according to insolvency and restructuring trade body R3’s latest research.

The proportion of businesses in the sector with a higher than normal risk of entering insolvency in the next 12 months rose steadily through the 18 months to the start of 2019, from 27.9% in July 2017 to 40.7% in February this year.

But since then, the proportion of at risk firms has reduced, and now stands at 37.6%, while the overall figure for the UK is 42.1%.

The latest R3 research shows that North East businesses in six of the 11 sectors it monitors are performing better than the national averages for their respective industries.

The North East’s pub sector continues to have the lowest proportion of companies at higher than normal insolvency risk of any region in the UK, while the agriculture and restaurant sectors are in second place in their respective lists.

The construction sector has continued to make slow but steady progress in the right direction and now sits in equal fourth place in its industry list, alongside its North West peers at 43.5%.

The overall proportion of all North East companies with an elevated insolvency risk (41.5%) remains slightly lower than the figure for the UK as a whole (42.5%).

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: “The transport and haulage sector’s insolvency risk has been dropping as the year has progressed, which, after a challenging 2017 and 2018, will be welcome news for businesses in the sector.

“With the North East being a net exporter of goods, issues around the future regulation of international transportation are waiting in the wings to potentially have an impact on the regional industry as and when Brexit occurs.

“Volatility in fuel prices that is beyond transport businesses’ control will also always be a concern, at least until all fleets are electric – a scenario that’s still some way off – but the improvement in the elevated risk level that’s been recorded this year to this point is definitely positive news to enjoy for now.

“The steady progress being made by the North East construction industry is also good news for the wider regional economy, as it shows businesses still have the confidence to invest in commercial and residential projects across the region.

“Financial challenges can arise for any business in any sector at any time, and proactively seeking advice from a qualified source as soon as they become apparent gives management teams the best chance of addressing, resolving and moving on from them.”

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