East Mids tech and IT businesses ‘least financially secure in UK’

East Midlands technology and IT businesses are at greater risk of insolvency than any of their UK counterparts, according to the latest sector tracking report from the Midlands branch of insolvency and restructuring body R3.

The news comes just two weeks before TheBusinessDesk.com’s Technology Breakfast event, at which business leaders from across the region will discuss the future of the sector.

The research, compiled using Bureau Van Dijk’s Fame database, highlights that more than one-in-three – 36.5% – local tech and IT operators are in heightened financial difficulty, which is three points above the national average of 33.4%.

The monthly statistics also reveal an uncertain outlook for some East Midlands hospitality businesses. Around one-in-five of the region’s hotels – 21.2% – have a higher than average risk of insolvency, which is the second highest ratio in the UK. Only the South West has a greater proportion of hotels at above average risk.

The picture is similar for East Midlands restaurants, with almost one-in-four – 23.8% – having an increased likelihood of insolvency. Once again, it is the South West region which has the greatest proportion of restaurants struggling financially.

R3 Midlands points out that there is positive news for the region, however, as the research reveals that East Midlands agriculture businesses are the best financial performers in their sector. Fewer than one-in-six – 15.5% – are operating with an above average risk of insolvency, which is around four points below the UK average.

CR3 Midlands chairman Chris Radford, a partner at the Nottingham office of Gateley, said: “These statistics paint a mixed picture for business recovery for the region. Despite reports of an economic upturn, not all companies are trading profitably, with many burdened by unmanageable debt.

“As the summer holiday season approaches, the outlook for many restaurants and hotels may improve as foreign tourists take advantage of the weak pound and visit the UK. Equally, unfavourable exchange rates may help persuade those in the UK to holiday closer to home.

“Often, a business’s struggles are invisible to outside eyes and it is not until a firm is on the brink of insolvency that its owners seek financial advice. However, the fact is that the sooner a business seeks professional help, the more positive the outcome is likely to be.”