The fortunes of professional services businesses in the North West are turning a corner, according to new research by R3, the insolvency trade body.
77 per cent of professional services and technical businesses have seen their risk of insolvency fall over the past year – the greatest improvement out of the North West’s 10 biggest industries. *
The figures relate to businesses operating in areas such as accountancy, law, PR and advertising, architecture, research and engineering, which together account for 256,000 jobs in the North West.
The region’s biggest source of employment is retail and wholesale, which account for 531,000 staff. In this sector 74 per cent of businesses improved their financial stability over the year. Other major industries in the North West include hotels, bars and restaurants, where 76 per cent reduced their risk of insolvency; transport (75 per cent), manufacturing (73 per cent) and construction (71 per cent).
Jeremy Oddie, North West regional chair of R3 who is also head of recoveries at accountants Mitchell Charlesworth, welcomed the figures. He said: “Businesses in all of the North West’s biggest industries have shown major improvements in their financial stability in the past year, which indicates that we may now be turning the corner. Some sectors such as retail and construction have had well documented problems so it is good to see signs of recovery. The performance of professional services is also positive as these are skilled, higher value jobs which are of strategic importance to the regional economy.
“In an improving economy, these figures should continue to get better, but it is important to avoid complacency. In the early stages of recovery there is the danger that growth is faster that a business can support. Business owners need to make sure they walk before they try to run.”
*By number of employees.
How the figures were compiled
R3 compiled the data using BVD’s Fame Database of company information. Companies in the Fame database are awarded a score based on their likelihood of insolvency in the next year. This score is based on factors such as turnover, pre-tax profit, working capital, cash and bank deposits and other factors. A high score indicates a low risk of insolvency in the next year, and vice versa.
The research took the top ten sectors (by employees) in each UK region and measured the number of businesses in each sector whose score had risen from last year (i.e. become more financially secure) and the number of businesses whose score had fallen (i.e. become less financially secure).