North East sees surge in insolvency risk levels

More businesses in the North East are facing up to a heightened risk of insolvency than a year ago, new figures show.

The latest analysis from insolvency and restructuring trade body R3 reveals that 35% of businesses in the region are deemed to be above average risk levels, compared to 25% one year ago.

Given that there are nearly 80,000 firms in the region, it means that around 28,000 businesses are deemed to be at risk of entering insolvency in the next 12 months.

The sharp rise in insolvency risk comes as 42% of the North East's technology firms report difficulties, closely followed by 41% if its professional services firms.

Risk levels are also high in the construction sector and in transport/ haulage, where 36% and 35% of firms respectively are above the average insolvency risk threshold.

Both the hotel sector and the transport sectors saw their risk levels increase by 2% across the last 12 months, followed by a 3% rise among restaurants in the region.

Increases of 4% in the agricultural and pub sectors meant that risk levels were also above the regional average.

According to R3s North East Chairman Neil Harrold, a 15% year-on-year increase in corporate insolvencies was recorded by the Insolvency Service in 2017 for firms in England and Wales.

He suggested the latest figures 'shouldn't come as too much of a surprise' and stated the North East 'was by no means alone' in seeing insolvency risk levels rise.

'With much uncertainty still pervading the political and economic climates, we may see further increases as this year progresses,' he added.

Despite more firms facing the threat of administration, the figures suggest some improvement in the hospitality sectors, especially when compared to the national average.

Any business facing financial difficulties may want to conduct options reviews to discover the best solutions that enable them to find the correct way forward.

By Phil Smith


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