The proportion of Yorkshire-based companies at higher than usual risk of insolvency fell marginally between June and July, according to the latest research by insolvency and restructuring trade body R3.
In Yorkshire, all 11 of the sectors monitored by R3 saw their levels of businesses at higher than normal risk of insolvency either remain flat or decrease between June and July.
The construction sector, often considered to be a bellwether of economic fortunes, was stable, with a marginal 0.3% fall in the number of Yorkshire firms at elevated risk. Of the nearly 27,000 active construction companies in the region, 46% or around 12,400 were deemed to be in the higher risk band. The level of construction companies in the region at increased risk is close to the UK-wide figure of 45%.
The sector which saw the greatest month-on-month decrease in Yorkshire was hotels, with a 1.8% fall in levels of businesses at higher than normal risk of insolvency in the next 12 months.
Looking across the UK and across the sectors, Yorkshire performed relatively well with 44% of businesses at elevated risk, only slightly higher than the national average of 42%. The regions which put in the strongest performances were Scotland (with only 35% of businesses at increased risk in July) and Northern Ireland (37%). However, the South East saw the highest levels of elevated risk with 46%, followed by the South West (45%).
Eleanor Temple, chair of R3 in Yorkshire and barrister at Kings Chambers in Leeds, commented:
“With the UK’s latest economic figures indicating that we may be on the cusp of the first quarterly fall in GDP since 2012, there are very real fears that Brexit uncertainty, together with the global trade downturn, are having an increasing and negative impact on businesses.
“While we are seeing relatively high levels of businesses at higher than normal risk of insolvency across many sectors and regions, it is reassuring that Yorkshire appears to be holding its own. The region has seen elevated risk levels remain flat or fall in nearly all sectors monitored by R3 this month, including construction, which has such a crucial knock-on effect on many other businesses.
“As many businesses brace for a possible no-deal departure and the disruption to supply chains this will cause, it is more important than ever that directors keep a close eye on cash flow and profit margins, and seek professional advice at early signs of financial trouble when the most options are available.”
R3 uses research compiled from Bureau van Dijk’s ‘Fame’ database of company information to track the number of businesses in key regional sectors that have a heightened risk of entering insolvency in the next year.