North East recovery gains momentum
Businesses in the North East are showing a greater resilience than "many other parts" of the UK, according to the latest Begbies Traynor Red Flag Alert.
The report, which monitors the financial health of businesses in the UK, shows that for the third quarter in 2014 there was a two per cent fall in instances of 'significant' financial distress in the region compared to the previous quarter, while the UK as a whole reported a rise of one per cent.
The North East also performed well in year-on-year figures, with a slight increase in the less advanced significant distress of just two per cent, well below the national average of a ten per cent rise.
The region did, however, suffer in terms of the more severe 'critical' financial distress, with a quarterly rise of one per cent compared to a five per cent fall across the UK, as well as a 16 per cent yearly rise compared to a national 12 per cent drop.
Andy Haslam, partner of Begbies Traynor in the North East, said: "While levels of the more advanced critical distress in the last quarter were higher here than in other parts of the UK, this is perhaps due to a recessionary lag with businesses which ran into problems over the last few years finally reaching the end of the line.
"In contrast, it is reassuring to see levels of significant distress, the early signs of financial difficulty, starting to dwindle, indicating that there are decreasing numbers of new instances of distress.
"Perhaps the greatest risk to our somewhat fragile recovery is the prospect of interest rate rises which many economists are predicting we will see in early 2015. Never before has the UK experienced such an extended period of low interest rates and even a small rise is likely to have a massive impact on both businesses and individuals.
"It is vital that directors start planning for these rises now in order to minimise their effect on the bottom line."
'Significant' problems persisted in the construction and real estate sectors in the region, but there were signs of recovery in travel and tourism, hotel, and bars and restaurants sectors.
Photo: Andy Haslam, partner of Begbies Traynor in the North East