North South divide for business in distress grows

THE NORTH is facing an increase in financially distressed businesses, widening the gap between the South which has seen levels fall, according to Begbies Traynor's Red Flag report.

London and the South East are seeing the levels of companies in distress decrease compared with Yorkshire and the Midlands which is seeing an increase the quarterly report shows.

Hardest hit is the North East with a 19% increase, compared to the last quarter, followed by the North West with a 12% rise.

The firm attributes the growing levels of distressed businesses to public sector cuts.

Ric Traynor, (pictured) executive chairman Begbies Traynor, said: "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.

"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."