Threat of insolvency facing one in ten firms, claims study

The Traffic Light report, compiled by RSM Tenon’s Recovery service line, found that in April 2011 roughly 16,000 companies in the North East – 13 per cent of the total surveyed in the region – were in danger of becoming insolvent in the near future.

This is a rise of three per cent against March’s figure, and seven per cent against the same point last year.

This is the fourth time in four months that the number of North East companies deemed to be at high risk of failure has risen.

Willie Duncan, a recovery director for RSM Tenon in Yorkshire, commented: “As well as the national issues affecting everybody such as the impact of higher inflation on real household incomes and spending power, this region may be suffering from an over-reliance on the public sector where jobs are deemed to be at risk.

“Also, in the private sector there are many businesses, for example in manufacturing, with high fixed cost bases, where the ability to react quickly to changes in demand by cutting costs is limited.”