The insolvency risk facing businesses in the majority of North East industry sectors has experienced a year-end fall, according to new research by insolvency and restructuring trade body R3.
Seven of the 11 North East industries that R3 monitors have seen the proportion of companies with a higher than normal insolvency risk fall between November and December, including in the manufacturing, retail and construction sectors.
Among the regional sectors to experience a rise in insolvency risk are the technology/IT, restaurant and transport/haulage sectors, although in better news, all are performing better than the national average for their respective industries.
The North East pub sector remains in the best position of any of its UK peers in terms of the proportion of companies at above-average insolvency risk, with 28% of pub companies in the elevated risk category compared to a UK average of 33.3%.
The region’s restaurant and agriculture industries are both in second place in their respective lists, while the hotel and construction sectors are in third in theirs.
North East companies are also currently performing better than the national averages for their respective industries in seven of the 11 sectors R3 monitors, with the overall proportion of all regional firms with an elevated insolvency risk (40%) being just over one percentage point lower than the 41.1% figure for the UK as a whole.
R3’s insolvency risk tracker is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balance 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 improvements we’ve observed are relatively minor, but in an economic climate that has been challenging this year and looks likely to maintain a similar profile in 2020, they are very welcome.
“The region’s hospitality industries appear to be enjoying a successful festive season, while the improvement in conditions in the North East retail sector will be especially welcome on our High Streets as the latest quarterly rental payments on commercial premises are due later this month.
“The first part of any new year is often the toughest for businesses in various different industries, and maintaining a firm grip on their firms’ finances will be a key task for owner/managers as we move into 2020.
“If financial issues begin to arise, it’s vital for management teams to act quickly and seek qualified advice on how best to address them, so they can find the right way to resolve and move on from them.”