Businesses are up against it

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THE NORTH East remains one of the most distressed areas of the UK with 4,155 companies facing “significant” or “critical” financial problems in the region, according to the latest quarterly Red Flag Alert from recovery specialist Begbies Traynor.

The report, which monitors the early warning signs of company distress, shows that little improvement year on year with 4,165 North Eastern businesses facing distress in the final quarter of 2009.

The figures also showed a rise of almost nine per cent in those with “significant” problems from 3,746 in the third quarter of last year to 4,074 in quarter four. The sectors with the greatest number of businesses with “significant” problems in the region continue to be construction, property, business services and IT, all of which are exposed to public sector cuts.

Andy Haslam, of Begbies Traynor in Newcastle, said: “North East businesses are continuing to demonstrate real signs of distress and trade creditors are both losing patience with their debtors and in need of collecting cash into their own businesses.

“Coming against a backdrop of the largest decline in house prices for a year, higher inflation, an accelerated decline in business confidence, and higher unemployment forecast for 2011, these figures indicate the renewed challenges facing businesses across most industries in 2011, particularly in the SME sector.”