Cautious optimism appears to growing among firms in the North, as new research shows business owners reporting more signs of growth than their peers around the country.
But insolvency trade body R3’s latest Business Distress Index (BDI) also found that well over half of owners (58%) in the area disagreed with chancellor George Osborne’s recent statement that the UK economy has now moved from rescue to recovery.
The BDI, which reports regularly on the successes and difficulties of hundreds of companies across the UK, showed the proportion of firms in the North East, Yorkshire and Humberside reporting increased profits in the last four months was significantly higher than the national average (27% versus 21%), and almost a third more had seen their market share grow over the same period (21% versus 16%).
Chairman of R3 in the North East Steve Ross, who leads the restructuring team from the Sunderland office of Baker Tilly Business Services Limited, said: “It’s clearly good news that the optimism we began to see in the regional economy earlier in the year is being sustained, but as anyone in business would tell you, we’re far from out of the woods.
“There has been plenty of positive economic news recently, but it’s important that we don’t forget that a lot of businesses - and small businesses in particular - still feel they have significant hurdles to overcome. Now isn’t the time for complacency.
“Larger businesses may well be confident that they can ride out any remaining bumps on the road to recovery, but SMEs still face significant pressures, whether from access to finance or simply the pressures of growing demand.”
Fewer than one in three firms in the North (32%) are exhibiting any of the five key symptoms of business distress that the BDI investigates. Only 3% say they are regularly maxing out their overdraft facility, compared to a national figure of 12%, while only one in seven (13%) has seen a recent reduction in sales volume, compared to almost one in five (19%) across the UK.
The regional figures for experiencing decreased profits and seeing a decline in market share are both lower than the national figure, with only the number having to make redundancies being higher than the UK-wide equivalent (10% versus 7%).Ross added: “It is easily forgotten that one of the most dangerous times for a business is immediately after a recession, when a lack of investment as a result of recessionary cutbacks and the stress of servicing growing demand take their toll.
“While it might look like economic recovery is taking place, it may not feel that way for businesses on the frontline just yet.”