Growing North-South divide in business stress levels

Growing North-South divide in business stress levels
BUSINESSES in the north are showing more signs of financial stress than those in the south, with the North West one of the hardest-hit regions, according to the latest Red Flag report.

BUSINESSES in the north are showing more signs of financial stress than those in the south, with the North West one of the hardest-hit regions, according to the latest Red Flag report.

The quarterly report by Manchester-based insolvency specialist Begbies Traynor showed that 11,057 firms are now showing “significant” or “critical” signs of financial stress – a 12% increase on the second quarter.

The North East was the only region showing higher levels of financial stress (19%), among 2,691 firms. In London and the South East, the number of firms indicating signs of financial stress declined by 6% and 3% respectively.

In Manchester, the hotel and accommodation sector is under particular pressure, with a 56% rise in significant problems over the last quarter.  In Liverpool, the property sector continues to come under pressure, with a 78% rise in firms with “significant” problems over the last quarter.

Gary Lee, a partner at Begbies Traynor in Manchester, said: “Over the past quarter, the threat of public sector job cuts has become a reality and a North-South divide has begun to emerge.

“The cuts are having a wide-ranging impact.  For the private sector, there has been a reduction in the number of public sector contracts.  Consumer confidence has also been knocked and there is a reticence to make anything but essential purchases.”  

Ric Traynor, executive chairman of Begbies Traynor, said: “Many of the regions worst affected are heavily dependent on the public sector so it is telling that these areas are witnessing increased levels of financial distress.

“Figures recently published by the ONS show that the second quarter of 2011 saw the number of public sector employees fall by 111,000 – the biggest fall since records began in 1999.”

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