Q3 2011 Red Flag Alert Report

RNS Number : 2007Q

Begbies Traynor Group PLC

17 October 2011

 



PRESS RELEASE

Q3 2011 Red Flag Alert Report

Growing 'North South divide' in levels of business distress

Impact of public sector cuts starts to hit home

Begbies Traynor Red Flag Alert - the quarterly report which monitors a series of indicators of company distress - clearly shows the beginning of a divide between levels of financial distress in the North and the South.

There has been a material increase in problems in the past quarter across the North East, North West, Yorkshire, the Midlands, the East of England and Wales compared to decreasing distress in London and the South East, according to the figures released today.

Against a UK average rise of 2%, the number of businesses facing both significant and critical financial distress in the past quarter dropped by 6% and 3% respectively for London and the South East, while all other regions in England and Wales faced increased levels of distress.

Hardest hit was the beleaguered North East with a 19% increase in business distress, followed by the North West with a 12% rise.  Yorkshire, the Midlands, Wales and the South West regions all saw increases in business distress of 10%.

In Scotland, where public sector cuts have come much later than in the rest of mainland UK due to the timing of the Scottish elections, levels of distress have fallen quarter on quarter, but the impact of recent and expected future cuts will not be felt in wider business distress for some time.

Ric Traynor, Executive Chairman of Begbies Traynor Group 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 areas showing much greater economic resilience than the rest of England and Wales.

"Many of the regions worst affected - such as the North East and North of England - are heavily dependent on the public sector so it is telling that these areas are witnessing increased levels of financial distress.

"The UK is seeing widely varying regional distress levels as a variety of sectors see polarised levels of hardship.  It is not surprising then, that we will end up with different areas seeing tougher economic times than others, especially where the public sector has historically been most important.

"Figures recently published by the ONS show that the second quarter of 2011 saw the number of public sector employees fall by 111,000 - the biggest fall since records began in 1999. This reduction in the employee base not only affects those individuals who have lost their jobs, but also local businesses dependent on public sector contracts."

ENDS

For further information please contact Twentyfour7 PR:

Bob Bion                                                             Sophie Morrod                                        

0161 212 7436                                                   020 7323 3230                                                  

[e-mail]                      [e-mail]        

Notes to editors:

Statistics on public sector employment taken from ONS 14 September 2011

Q3 2011 Red Flag Alert Statistics

Table shows combined problems (Significant & Critical) by region

Region	Q2 2011	Q3 2011	Percentage change
Scotland	6,039	5,820	-4%
North East	2,261	2,691	19%
North West	9,842	11,057	12%
Yorkshire & Humberside	6,116	6,704	10%
Midlands	12,817	14,103	10%
East of England	2,593	2,676	3%
South East	29,155	28,244	-3%
London	20,719	19,461	-6%
South West	7,042	7,721	10%
Wales	2,610	2,864	10%
All Regions	99,194	101,341	2%

About Begbies Traynor Red Flag Alert

Red Flag Alert measures corporate distress signals through a comprehensive and complex methodology, drawing on factual legal and financial data from a wide range of relevant sources for companies that have been trading for over a year.

The survey monitors the numbers of companies experiencing difficulties in two categories: "Significant Problems" and "Critical Problems".  

Companies with "Significant Problems" are those with either a court action and/or poor, very poor insolvent or out of date accounts.

Companies with "Critical Problems" are those with CCJs totalling £5,000 or more and/or Wind-Up Petition related actions.

Red Flag Alert is now commercially available to all businesses, on an annual subscription basis, to help them better understand risk and exposure and help prepare them for the future. 

Further information about Red Flag Alert can be found at: www.redflagalert.com

About Begbies Traynor Group

Begbies Traynor Group plc is a specialist professional services consultancy providing independent professional advice and solutions to businesses, financial institutions, the accountancy and legal professions and individuals in the areas of recovery, corporate finance, investigations and risk management.  It is listed on AIM (Ticker: BEG).  Further information can be found at: www.begbies-traynorgroup.com

 

END

 

 

NRALIFSAIFLSLIL