North East businesses in three industry sectors have come out on top in new business stability tables which compare their performance with their peers around the UK.
The latest research by insolvency and restructuring trade body R3 found that the region’s restaurant, pub and agricultural industries all had the lowest proportion of firms with a higher than normal risk of insolvency when compared to companies in their sectors in 11 other UK regions.
The pub and agriculture sectors have both moved up from second place rankings in their respective lists last month, while the North East hotel sector has retained third position in its list and both the region’s transport/haulage and technology/IT sectors remain in fourth position in theirs.
It’s the first time that three North East industries have been ranked as the most stable anywhere in the UK since R3 began monitoring different sectoral performances in 2014.
And after making slow gains against its regional rivals over the last year, the North East construction sector now finally has a lower proportion of firms with a raised risk of insolvency than the national average (41% vs 42%).
On the downside, more than half (50.3%) 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 48%.
The region’s retail sector also remains one from the bottom of its sectoral table, ahead only of the South West, with 39% of North East retail companies having an elevated risk of insolvency compared to a national average of 36%.
Overall, regional firms in eight 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 (39%) being slightly better than the overall national figure (40%).
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: “Economic conditions remain far from ideal for everyone, but to see three North East industries in the best position of any of their respective peers across the UK at least gives some degree of encouragement.
“With the summer months upon us, the hope will be that the region’s leisure industries will be able to make even more gains through the rest of the year, and that the North East retail sector will feel some of the benefits of the better weather too.
“Seeing the North East construction industry continuing to make slow but steady progress against other regions after such a sustained and challenging period is definitely good news, but the fact that more than half of the firms in our professional services sector are at greater than normal risk of insolvency is very much less so, especially when you consider just 35% were in this position in September last year.
“Any company in any sector can run into trouble at any time, and acting as soon as problems become apparent is crucial if owner/managers want to retain access to the widest possible range of potential solutions to their problems.”