The North East economy is showing a degree of resilience in the face of uncertain times, according to new research by insolvency and restructuring trade body R3.
North East businesses in six of the 11 industry sectors that R3 monitors are in the top three performers in the UK in terms of having the lowest proportion of companies with a higher than normal insolvency risk last month.
The North East pub sector is in the best position of any of its UK peers in terms of the proportion of companies at above-average insolvency risk, with 28.1% of pub companies in the elevated risk category compared to a UK average of 33.3%, while its restaurant and agriculture industries are both in second place in their respective lists.
The region’s transport/haulage industry is in third place in its sectoral table with 36.1% of companies at higher than normal risk of insolvency (UK average: 39.7%), behind only Northern Ireland and Scotland, and is performing better than any other English region.
Meanwhile, the North East’s construction and technology/IT sectors, both of which have had significant difficulties over the last few years, are also in third place in their respective tables.
North East companies are currently performing better than the national averages for their respective industries in seven of the 11 sectors that R3 monitors, with the overall proportion of all North East companies with an elevated insolvency risk – 40.1% – being exactly one percentage point lower than the 41.1% figure for the UK as a whole.
On the downside, the North East’s professional services sector is performing better than only one other UK region, while the performance of both the regional retail and manufacturing industries is slightly below the national average.
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 uncertainty that has reigned throughout the year and the numerous challenges that have faced businesses as they struggle to plan for the future have undoubtedly had a tangible economic impact, so to see many of our regional industries outperforming their counterparts around the UK is very encouraging.
“Our hospitality industries have maintained their usual strong position in comparison with their UK peers and they will be hoping to finish the year strongly on the back of a profitable festive season that’s now getting quickly into full swing.
“The North East construction sector was at the very bottom of its sectoral list not so long ago, so the progress that’s been made over the last couple of years to the point we’re at now is especially impressive.
“The hope will be that the many commercial and residential schemes that are being built around the region will help further improve the sector’s performance into the new year and beyond.
“Despite the positives that can be taken out of our research, it’s as vital as ever for business owners and managers to stay in control of their finances and to take proactive steps to address any emerging financial issues as soon as they become apparent, so they have the best possible chance of resolving them.”