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Region among worst for business failures

Friday 4 January 2013 5:00

North East bucks trend with an increase in businesses folding

New research shows that the North East and Yorkshire are the only English regions showing a year-on-year increase in the number of business failures.

Combined figures for the two regions show 305 business failures in 2012, up by 9% on 2011, in sharp contrast to England as a whole which saw a 9% drop.

This latest regional administration research from Deloitte, the business advisory firm, reports 1,833 businesses in England entering administration in the period, down from 2,009.

Neil Matthews, restructuring services director at Deloitte in the North East, said: “The year-on-year figures for the North East are particularly bleak, and are a stark reminder of the difficulties which continue to face businesses.  Constrained budgets and the challenges facing all sectors mean it is certain that we will see further distress next year.”

Matthews said the retail sector would continue to face a particularly challenging time in 2013.

“For retailers, Christmas trading appears to have been reasonable, though not spectacular and not enough to prevent insolvencies in the first quarter of 2013,’’ he added.

“It is also notable that high profile, nationwide chains continue to be among the casualties despite the shake-up seen in the sector since 2008. Last year alone we have seen Peacocks, La Senza, Blacks, Game, Clinton Cards, JJB Sports and Comet enter administration.”

He said that strong consumer spending growth was unlikely to return any time soon making it essential for retailers to address the fundamental issues such as store portfolios and multichannel including online and mobile.

Almost all of the sectors tracked in the Deloitte analysis saw a decline in the number of business failures in 2012, including some of those sectors most affected by the economic difficulties of the past five years.  There were 21% fewer administrations in the hospitality and leisure sector, 9% in manufacturing and 7% in property and construction. Apart from retail, only financial services and the mining & energy sectors saw notable increases.