A third of businesses ‘at heightened risk of failure’
Around one in three North West firms are now at heightened risk of insolvency, up from one in four at the start of the year, according to new figures from the restructuring and insolvency trade body R3.
R3’s research shows the number of companies in the region considered at a higher than normal risk of failure in the next 12 months has risen from 24% in January to more than 32% in December – equivalent to over 116,700 firms.
Technology and IT businesses are under greatest pressure, with almost 39% of firms at greater than usual risk, followed by professional services with 37%, transport and haulage with 36%, and construction and agriculture, both with 31%.
Agriculture was also the industry which showed the biggest swing, having started 2017 as one of the lowest risk sectors, with just 20% of North West agricultural firms at higher than normal risk of insolvency.
Amongst retailers, 29% fell into the elevated risk category in December, up from 24% in January. However, there was some festive relief for leisure businesses, with just 23% of hotels and 24% of restaurants and pubs at greater than average risk in December.
Paul Barber, North West chair of R3 and a partner at Begbies Traynor, said: “Although the business climate has been relatively benign during 2017, the number of firms at risk has been rising steadily in the second half of the year, with December showing the biggest rise of the year. Businesses are navigating uncertain times, while the lower pound and possibility of a fall in consumer spending are adding to the pressure.
“Directors will need to actively monitor their performance and should be ready to take action and call in professional help if they see the warning signs.”
The figures are from R3’s latest insolvency risk tracker. The tracker is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balance sheets, director track records and other information to work out their likelihood of survival over the next 12 months.
