LEVELS of “business distress” in Yorkshire are rising faster than in many other parts of the country, it was claimed today.
A survey by business rescue and recovery firm Begbies Traynor said the number of firms in the region facing “critical” or “significant” financial difficulties was rising faster than the UK average.
The firm’s quarterly Red Flag Alert statistics showed a 10% rise in distress cases in Yorkshire during the third quarter of the year against a rise of just 2% for the country as a whole.
Across the UK, 101,341 companies showed instances of significant or critical financial problems, according to figures for the three months to September. Of those, 6,704 are businesses based in Yorkshire.
Distress levels also rose in the North East, North West, the Midlands, Eastern England and Wales.
David Wilson, of Begbies Traynor in West Yorkshire, said: “As the threat of public sector job cuts became a reality in the past few months, a North-South divide has begun to emerge with the South East and London showing much greater economic resilience than areas such as Yorkshire.
“With our heavy dependence on the public sector, it is not surprising that the region is witnessing financial distress growing at a faster rate than in other parts of the UK.”
Business-to-business support services continued to be the sector hardest hit by significant problems, accounting for 20% of the total compared with 17% during the same quarter last year.
The construction sector made up 15% of the total against 13% last time.
Retail saw a rise in significant problems from 5% to 7% compared with the previous year, There was also a 1% rise in critical problems in the hotels sector as consumers reined in spending.
Julian Pitts, also of Begbies Traynor, said: “We are starting to see a knock-on effect on consumer spending with sectors such as hospitality and retail being hit by the reduction in discretionary spend.
“Unfortunately, the loss of contracts and jobs resulting from the public sector spending cuts will be felt for some time to come.”
Red Flag Alert measures corporate distress signals by drawing on legal and financial data affecting companies that have been trading for more than a year.