North East businesses see critical distress levels rocket by three quarters in final quarter of 2024

According to the latest Begbies Traynor Red Flag Alert research there were a total of 920 instances of critical distress in the last 3 months of 2024 affecting companies in the North East, a 10% increase year on year, compared to a UK average fall of just over 1%.

The report, which has provided a quarterly snapshot of corporate health in the UK for almost two decades, shows that in the last quarter of 2024, early-stage or ‘significant’ business distress also rose faster than the UK average, recording 12,261 instances affecting firms in the North East, and over 654,000 business across the UK. This represents an increase of more than 28% year on year in the region (UK average +21.3%) and 5.3% when compared with the previous three-month period (UK average +3.5%).

The most impacted sectors showing the highest quarter-on-quarter rises in early ‘significant’ distress in the North East were financial services (+27%), real estate and property services (+13%) and food and beverage production (+11%). Declines in distress were recorded across just six of the 22 sectors, including transportation and logistics (-15%), hotels and accommodation (-5%) and food and drug retailers (-4%) which typically see a busy Q4 ahead of the Christmas retail period.

Andrew Little, partner for Begbies Traynor in the North East, said: “The latest quarter of data reinforces the challenging headwinds North East businesses are facing. The region’s firms are seeing faster rises than the UK average, which doesn’t bode well for their fortunes in 2025.

“Two periods of growth back to back, and with the prospect of a tough Q1 and Q2 ahead, raises concerns that the economy here will be under siege this year.”

Partner Gillian Sayburn added: “This new data comes hot on the on the heels of a less than positive Autumn budget for businesses. Employers are about to start feeling increased payroll costs as a result of the higher employers’ National Insurance burden, which is not going to help prospects for the region’s businesses this year.

“We are expecting the whole of the UK to see the impact of these additional overheads, and it’s hard to see how these will be mitigated without raising prices, thus feeding inflation and pushing supply chain costs upwards for the coming year. Boards are working hard to find efficiencies, but the economy and these trends are likely to impact employment levels as firms downsize their teams, or hold off hiring when employees leave roles.”