Northern industry sectors outperform rest of UK
Despite economic uncertainty and tough trading times, businesses in the North East are showing more signs of stability than any other region of the UK.
Data from insolvency and restructuring trade body R3 compares the proportion of firms across 11 major sectors that are considered to be at above average risk of insolvency.
Restaurants in the region outperform those in the rest of the UK, as the insolvency risk level is lowest in the North East.
Meanwhile the agricultural and pub sectors have the second lowest proportion of firms deemed to be at risk, with the hotel and transport and haulage sectors third in their respective ranking.
However, 49% of the professional services firms in the region are facing a higher risk of insolvency – a figure above the national average of 47%.
For comparison, the proportion of firms deemed to be at risk 12 months ago stood at just 30%, was at 35% in September 2017.
Retail firms in the region are also struggling, with only those in the South West having a more elevated insolvency risk.
For the North East as a whole, seven of 11 key industries have risk levels that are below the national average for those sectors.
The figures come against a backdrop of rising corporate insolvency, as the first quarter saw a 13% jump compared to the final three months of 2017.
R3’s data used Bureau van Dijk’s Fame database and tracks balance sheets, director records and other company information to create a measure of business stability.
This provides a means of calculating a company’s likelihood of survival for the coming 12 months, enabling firms in difficulty to act if necessary.
Overall, the level of firms facing a growing risk of insolvency is rising, and while the leisure sector in the region has performed consistently in the last year, others have not.
R3’s North East chair Andrew Haslam said that the performance of certain sectors in the region can provide a “degree of comfort” against a difficult backdrop.
The key for businesses looking to avoid administration or other financial methods is to understand and manage their cash flow effectively, so that they can identify issues at an early stage and act appropriately.
By Phil Smith