New data recently released from the insolvency and restructuring trade body R3 has highlighted that there is an increase in the risk of businesses in the North East becoming insolvent within the next 12 months. As of the end of July, the report highlighted that 27.3 percent of companies in this region faced the risk of becoming insolvent, compared to 24.8 percent at the beginning of 2017.

The agriculture sector was particularly at risk with an increase of 2.7 percent compared to the risk of insolvency 7 months ago. The difficulties facing the agriculture sector were highlighted 5 months ago in an article by PCR, which suggested farmers were particularly worried about the UK leaving the European Union single market. It was deemed essential that for the farming industry to prosper, there had to be access into the European market free of tariffs and free of any non-tariff barriers. Although there are many other contributing factors to why this sector is facing increasing challenges, the latest figures go some way to supporting these initial fears experienced by farmers at the start of the year.

The report commissioned by R3 also reveals that risk of insolvency had risen in the manufacturing, technology and hotel industries, with all seeing a rise of between one and two percentage points. Of the 11 regional business types monitored on a monthly basis by R3 over the first six months of the year, the risk of insolvency had risen in six of those industries.

This is why at PCR we cannot stress enough to businesses who are experiencing difficulties, or have concerns to seek help as soon as possible. With businesses facing a mixed future in numerous sectors, acting as quickly as possible can increase the likelihood of finding a positive outcome.

It is also important to stress that it is not all alarming news, as the North East’s pub and restaurant industries both enjoyed a solid first half of the year with falls of 2.1 and 1.8 percentage points in relation to their insolvency risk. The positive vibe emanating in this sector for the remainder of the year was also apparent in the tourism industry with a one percentage point improvement recorded amongst regional tourism operators. This is of particular note as it is that traditionally, the second half of the year where the leisure sector tends to record their best figures for the entire year.

Nonetheless, the first half of the year has seen several issues which have impacted on regional businesses’ capacity to both make progress and to plan effectively for the future. These include the rise of inflation, the continued uncertainty surrounding Brexit and the weakness of sterling against other currencies.

Despite the difficult market conditions, it is important to realise that at PCR, we can assist in reviewing your business and to make sure it is in a position where it is fit for the future. We can look at the structure of your business and assess its physical and financial assets as well as performance, and advise you promptly. 

Ahmed Ali

Marketing & Practice Development Executive 

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