Northern professional services facing greater insolvency threat
Professional services firms in the North West of England are facing a mounting risk of insolvency, new research shows.
Figures from insolvency and restructuring trade body R3 - and compiled using Bureau van Dijk's Fame database - reveals that accountancy firms, lawyers and professional services is now the sector facing the greatest threat.
Some 43.2% of the sector is deemed to be facing an above average threat of insolvency, which equates to more than 2,600 businesses.
Despite the insolvency risk level rising in the North West, the region has performed better than the majority of the UK - only professional services firms in London and Northern Ireland have a lower proportion of firms deemed to be at risk.
R3 monitors a wide range of sectors, with the technology and IT, and transport and haulage sectors also displaying high levels of insolvency risk.
Some 42.6% and 39.9% of those sectors respectively face an above average risk of insolvency in the coming 12 months.
One positive for the region is the performance of the restaurant and pubs sectors, as both have insolvency risk levels that are below the national average for those sectors.
R3's North West chair Paul Barber explained that risk levels have risen across all sectors in the past few months, although the speed of the rise for professional services has far exceeded other industries.
He explained that professional services firms have come under mounting pressure in the past few years, and pointed to legislation changes that have reduced demand for services.
Traditional firms in the sector have also had to face up to competition from online providers, which has proved difficult when firms are trying to reduce their spending on legal fees.
Mr Barber said that although a number of firms in the North West have transformed their practices to deal with the new trading environment, a number have not.
Businesses facing tougher times should seek advice at the earliest opportunity, while an independent business review may assist with the development of a long term strategy to change a firm's fortunes.
By Phil Smith