YORKSHIRE companies are showing signs of recovery – with fewer firms facing financial distress.

Figures from insolvency practitioner Begbies Traynor showed a 7% fall in the number of businesses in the region in “critical” distress during the second quarter of 2011 compared with the same period in 2011.

The firm’s quarterly Red Flag Alert statistics showed that almost 99,200 UK firms are facing “significant” or “critical” financial problems in the three months to June.

The Yorkshire tally of 6,116 is 47% down on the first quarter of the year which saw a total of 11,576 instances of distress.

However, seasonal trends account for almost all of the decline as retail and hospitality sector businesses often run into difficulties after the Christmas period distress and “significant” problems are materially higher in the first quarter because of the volume of overdue accounts due to be filed by December 31.

In addition, many struggling companies continue to make use of HM Revenue & Custom’s Time to Pay scheme, which provides temporary breathing space.

Begbies spokesman Julian Pitts said: “We welcome any statistics that suggest that Yorkshire grit is starting to show through and businesses are beginning to recover – as the region is among those bearing the brunt of the recession over the last three years. However, to keep this in perspective, we have seen only a relatively small reduction of problems in percentage terms and there were 344 instances of critical business distress in the region.These figures show the business environment is still challenging in Yorkshire and the picture across the country is fairly gloomy.”

Survey findings reveal that 5,772 businesses in Yorkshire and Humberside showed signs of ‘significant’ business distress in the second quarter of 2011, down by 24.5% from 7,649 in the same quarter of last year.

Businesses with “critical” problems are those facing county court judgements totalling more than £5,000 or winding-up petitions.