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North-south divide deepens in crunch

The North East is making the most of the recession, according to the latest research into business successes in the economic downturn.

While reports like this offer a different view every week, a survey by the Open University Business School has determined that almost three-quarters (71%) of London’s SMEs suffered falling or stagnant sales in the fourth quarter of 2008. The North East and Scotland performed better than any other region in the same period.

The survey of almost 1,300 firms in England, Scotland and Wales found that a quarter (23%) of the capital’s small companies cut jobs as trading deteriorated - the sharpest fall in employment reported. Small firms also fared badly in the South East, South West, East Anglia and the West Midlands, with sales falling or at a standstill.

Overall, the smallest firms, whether their size is measured by turnover or headcount, performed worse than bigger competitors, according to the survey by the OU for the Finance & Leasing Association (FLA).

Small firms are usually owed more by their customers than they owe to suppliers, so end up funding bigger firms which tend to be late-paying customers.

Stephen Sklaroff, director general of the FLA, said: “The financial crisis in the City of London may well have contributed to the clearest north-south divide for some time.

“But there is growing evidence that the problems in the capital are rippling out to every other area of the country and SMEs in all regions are braced for an extremely challenging year.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .