South: Professional services ‘at most risk from insolvency’

Nearly half of all companies in the South East face a higher than average risk of insolvency, according to new research from insolvency and restructuring trade body R3.

The percentage of 44.9% is the greatest for any region in the UK and above the national figure of 44.1% as per R3’s November insolvency risk tracker.

Following the South East in November were the South West (43.5%), East of England (43%) and Wales (42.9%).

Looking at the position by sector, the research showed that just under half (49.3%) of professional services companies based in the South East were deemed to be at greater than normal risk of insolvency. This was the highest for any sector in the South East region – and for any sector in any region of the UK.

Following on from professional services, the next sectors showing an elevated risk of insolvency were technology & IT (47.3%), construction (47.2%) and retail (40.6%) followed by tourism and transport & haulage both on 39.9%.

On a positive note, agriculture (34.2%), restaurants (35.1%), and hotels (35.2%) fared better with the lowest sector percentages of companies at higher than usual risk of insolvency.

Agriculture (34.2%) was the only sector in the South East to buck the figure for the UK, which stood at 36.2% of firms at higher than usual risk of insolvency.

Mike Pavitt, chairman of R3’s Southern Committee, said: “Although research shows the South East has the highest proportion of firms at elevated risk of insolvency in the UK, it is a region characterised by entrepreneurialism and innovation.

“Young firms and start-ups are among those with a greater than usual risk of insolvency early in their growth trajectory, which has an impact on the research figures.

“More broadly, the South East followed the same sector-specific trends as other regions.

“Retail also continues to face considerable headwinds, as demonstrated by the recent problems experienced by Mothercare, Clintons and Mamas & Papas and performance in the upcoming Christmas period may prove critical for others in this sector.”

Pavitt added: “It is important that any company seeks expert advice at an early stage should it encounter any difficulties.

“Support from a qualified and professional source as soon as possible will mean more options are available.”

The figures are from R3’s latest insolvency risk tracker. The tracker is compiled using Bureau van Dijk’s Fame database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.

R3’s Southern Committee includes Buckinghamshire, Oxford, Hampshire, Isle of Wight, Berkshire, and Wiltshire.