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The rising cost of fuel and utilities is the biggest problem faced by businesses in the North of England, according to a survey by the insolvency trade body R3.

The latest Business Distress Index from R3 shows that almost a third (31 per cent) of those questioned cited rising fuel and utility costs as their biggest problem, followed by reduced consumer spending, identified by 22 per cent of respondents. Only three per cent identified an inability to secure further credit or a bank loan as a main problem.

The survey also shows that business distress levels have fallen to their lowest levels since the index began in 2010. Over two-thirds (67 per cent) of businesses in the North now show no distress indicators at all, compared to 43 per cent a year ago. Meanwhile 59 per cent of businesses are showing signs of growth.

R3’s North West regional chair Jeremy Oddie, who is also a head of recoveries at accountants Mitchell Charlesworth, said: “Businesses still feel they are being squeezed on both sides. With consumers still unwilling to spend, companies are concerned about their margins. As they depend on fuel and utilities to operate, it makes it hard for them to cut costs.“

Only four per cent of businesses are now regularly using their maximum overdraft compared to 25 per cent a year ago. “Access to credit has slipped away as an issue,” adds Jeremy Oddie.

“Perhaps businesses are getting used to life with reduced debt and relying less on credit. However it could also indicate that many businesses are not bothering to go to banks for funding. Business growth is still very hesitant – while things aren’t getting worse, they aren’t improving either.”