That’s the conclusion of the latest research by insolvency trade body R3 into the proportion of North East companies with a higher than normal risk of insolvency, which has found that the regional risks are below the national average in seven of the ten key industry sectors that the organisation monitors.
The North East transport/haulage sector has recorded the lowest such risk of any of the 12 UK regions for the seventh consecutive month, while the region’s manufacturing, restaurant, technology & IT and pub sectors are all in the top five of their respective UK-wide tables.
However, the proportion of regional hotel businesses with a higher than normal risk of insolvency has risen by seven per cent since the start of August, with just short of a quarter (23%) now in this position.
The North East construction sector is only faring better than its peers in Northern Ireland according to the research, while its professional services sector also ranks 11th out of 12, ahead of only London, although this sector did see an almost five per cent drop in August in the proportion of businesses therein with a higher than normal risk of insolvency.
Every month, R3 uses research compiled from Bureau van Dijk’s ‘Fame’ database of company information to track the number of businesses in key regional sectors that have a heightened risk of entering insolvency in the next year.
Allan Kelly, chair of R3 in the North East and a restructuring partner with Baker Tilly North East, says: “We’re seeing continuing falls in regional insolvency risks that indicate a slow, but steady improvement for many of our industries, and it’s good to see many of them holding their own against their peers from across the UK, if not outperforming them.
“The disappointing summer weather can’t have done much to help the region’s hotels, but with lots of major events taking place through the autumn, including the imminent Rugby World Cup, they’ll be looking for opportunities to make up lost ground in the coming months.
“The impact of the financial downturn on the construction sector was especially severe. We’ve seen a clear knock-on effect in recent months on the smaller suppliers of regional construction firms that have got into financial difficulties which in turn spurs trading issues of their own.
“The best way for company owners and management teams to address financial concerns is to proactively seek advice from a qualified source such as an R3 member as soon as they become apparent, so they give themselves the best possible chance of getting things back onto an even keel.”