Businesses showing least ‘distress’ for years

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Signs of distress amongst businesses in the north are at their lowest in over four years, according to research by the insolvency trade body R3.

Just 25 per cent of businesses in the region are now showing signs of distress, compared to 68 per cent in Autumn 2010 when R3 first launched its Business Distress Index.

The index shows that signs of distress amongst northern businesses peaked at 83 per cent in early 2011.

Richard Wolff, North West regional chairman of R3, said: “Business distress has fallen steadily over the past two years as businesses have got over the worst of the recession.

“This has been matched by steadily falling corporate insolvency numbers.

“Historically, business failures increase as the economy bounces back – sudden growth can be a problem for businesses that have used up their cash reserves or are not prepared for expansion.

“However, low interest rates and the much slower pace of recovery we have had up until the last nine months or so have given many struggling businesses time to sort out their problems and prepare for growth.”

The index tracks five key 
indicators of business distress.

The latest Business Distress Index shows that only 17 per cent of businesses in the north have seen a decline in sales recently.

Twenty three per cent reported decreased profits, and six per cent have had to make redundancies.