Partner Article

High levels of distressed businesses in the region

Levels of businesses in distress in the region have risen by over 38% in the second quarter this year, compared with the same period in 2011.

The North East is the region hardest hit by the rises in ‘significant’ business distress, with statistics from Red Flag Alert showing that problems have risen by 29.5 percent, in comparison with a national average of 1.4 percent.

This figures is especially unusual, as ‘significant’ problems tend to occur during Q1 due to seasonal variations. Of the 99,194 instances of ‘significant’ or ‘critical’ problems in the last quarter, 2,261 of these involved businesses in the North East.

Andy Haslam, partner at Begbies Traynor in Newcastle said: ’The last few years of heavy public and financial services sector cuts. And the knock-on effects through the rest of the economy are now being seen in the levels of business distress here in the North East.

“Many businesses continue to make use of the Revenue’s Time to Pay Scheme, which provides temporary breathing space for businesses, although HRMC is starting to take a more robust stance.”

Sectors hardest hit by these problems were unexpectedly construction, business-to-business services and manufacturing, which accounted for over half of the instances of critical distress.

He added “Some sectors and individual; businesses are recovering, and we hope that these success stories can continue to trade well, adding wealth and jobs to balance the regions economy.

“What is obvious however is that national statistics and averages we often hear about simply don’t reflect the regional picture, especially here in the North East.”

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