The proportion of North East businesses with a higher than normal risk of insolvency has dropped across many industry sectors through the autumn.
The latest data from insolvency and restructuring trade body R3 shows that nine of the 11 regional sectors that it monitors reported a fall in the proportion of companies in them deemed to be at higher than usual risk of insolvency between October and November, with the largest drops being recorded in the pub (5.3%) and restaurant (3.1%) sectors, and the overall risk for all industries falling by almost 2%.
The North East’s technology, retail, hotel and professional services sectors each recorded falls of around 2%, while manufacturing, construction and transport also saw their proportion of ‘increased risk’ firms drop.
The North East agriculture sector recorded a 1% rise in its proportion of ‘increased risk’ businesses, while the same proportion in the regional tourism operator sector rose by just under 4%.
Overall, eight of the 11 key industries that R3 monitors currently have a smaller proportion of companies at higher than normal risk of insolvency when compared with the UK average. The proportion of all North East businesses at elevated insolvency risk – 41% – is also lower than the UK figure of 42.2%.
The pub and restaurant sectors continue to have the lowest proportion of companies at higher than normal insolvency risk of any region in the UK, while the agriculture and hotel sectors are in second and third place in their respective lists.
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 trend through 2018 has been steady rises in the proportion of companies at elevated risk, so this latest dataset showing improvements, albeit small ones, for many of the region’s industries is good news for each one of them individually and for the wider regional economy as a whole.
“With the Christmas party season getting into full swing, it’s probably no surprise to see the pub and restaurant sectors continuing to do well, but the gains made in the likes of manufacturing, construction and especially professional services, which has had a tough year, are especially good to see.
“The dip in fortunes for tourism operators may simply be down to the current time of year, and if the usual patterns follow, we would hope to see things improve as people start to plan and book their 2019 holidays.
“If any business owners foresee financial problems coming their way, it’s vital that they seek qualified advice as quickly as they can, so they can retain access to the widest possible range of solutions that could help them put things right.”