North East insolvency risk levels jump 7% in 2018

More firms are now operating in the North East than at the start of the quarter, although the number facing an elevated insolvency risk has also risen, new figures show.

Data from insolvency and restructuring trade body R3 shows that more than two‐fifths of firms in the region are facing up to an element of financial woe.

The number of active businesses climbed by 1.3% in the third quarter, although the number of businesses deemed to be at above average risk of insolvency jumped by 2% in the same period.

Some 42% of companies in the region are now facing an element of financial risk, while that figure has climbed steadily from 35% at the start of 2018.

The figures are compiled using Bureau van Dijk’s Fame database and calculate risk levels for the coming 12 month period based on director track records and financial information.

It’s not all negative news for the North East, as the region’s pub and restaurant sectors are performing better than anywhere else in the UK – both sectors have the lowest proportion of firms at heightened risk of insolvency.

Both the region’s agricultural and hotel sectors are also performing strongly, with both sectors having the second lowest risk levels nationally.

However, the North East’s retail and professional services firms are among those deemed to be most at risk of insolvency across the UK.

R3’s North East chair, Andrew Haslam, said that despite a rich entrepreneurial spirit in the region, the “relentless” rise of insolvency risk levels means numerous firms have failed in the third quarter.

He added that while the leisure sector received a boost as a result of good weather and the World Cup in the summer, many retailers will be hoping that the Christmas shopping season starts sooner rather than later.

Businesses with concerns over their financial position or who want to make the most of prospects should seek business advisory services at the earliest opportunity.

This increases the likelihood of finding a suitable solution and helps to minimise any potential negative factors in the event of rescue or restructuring.

By Phil Smith




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