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Business insolvency risk decreases across South East, R3 research shows

Hannah Bergman-Brown

Hannah Bergman-Brown

Published Thursday 16th May 2019

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Businesses in a number of sectors across the South East have shown a decreased risk of insolvency, according to new research by restructuring and insolvency trade body R3.

 

Of the 12 sectors monitored on a monthly basis, technology and IT is at its lowest risk since April 2018, while pubs and agriculture are both at their lowest since July 2018.

 

Within the South East technology and IT sector, 50.1% of companies are currently at a greater than normal risk of insolvency. This is the highest figure across the UK, and higher than the national average of 47.1%, however it should be noted that the South East’s IT sector has seen month on month reductions in the proportion of firms deemed at above-average risk of insolvency since September 2018, when it reached 53.1%.

 

Of the 3,430 pubs in the region, 40.1% are currently at a greater than normal risk of insolvency. This figure is the lowest since July 2018’s percentage of 39.4%, although it is above the UK average sitting at 34.9%.

The agricultural sector saw a small reduction in its elevated risk figure between March and April 2019, leaving some 1,100 of the sector’s 3,000-plus companies at a greater than normal risk of insolvency. This is the lowest figure since July 2018 and below the UK average of 37.3%.

 

Ahead of the summer holiday season, there is some cheer for tourism businesses in the South East: 41.9% are at a greater than normal risk of insolvency – the lowest figure since August 2018. Although higher than the UK average of 37.6%, holiday businesses in the South East outperform ones in the South West (45.4%) and match those in the East Midlands (41.9%).

 

Mike Pavitt, Chair of R3's Southern Committee and partner and head of the corporate restructuring and insolvency group at solicitors Paris Smith LLP, says: “It’s great to see such a positive lift for several sectors in the risk of insolvency for the South East. Many sectors have been stagnant over the last 12 months and although these figures only show a small decrease in the risk, this is still a bit of good news for local companies.

 

“Despite this positive news, business owners and directors across all sectors should monitor their finances carefully, plan for all foreseeable eventualities (with a particular eye on the continued uncertainty surrounding Brexit), and keep careful records of their decision-making processes including the evidence upon which those decisions are based. It is vital to remain alert to signs of trouble and to be ready to adapt to the changing economic landscape.

 

“If in doubt, consulting qualified, regulated restructuring specialists as early as possible and acting on their advice will help to maximise the options for a business, increasing its chances of future survival and prosperity, whilst also mitigating the potential downsides for directors, should the business enter insolvency.”