A “NORTH-SOUTH” divide in the company failure rate widened in 2011 as 21,000 companies went bust across the UK, according to research by an accountancy firm.
Businesses in the North East and North West of England were more than one and a half times as likely to go bust than their counterparts in the south in 2011, RSM Tenon said.
ROUGHLY one in every 40 companies in the North East and North West became insolvent this year, compared with less than one in 70 in London and the South East.
In the latest blow to the Coalition’s plans to encourage a manufacturing-led recovery, the research showed that companies which are failing fastest in the North tend to be manufacturing-based.
Carl Jackson, head of RSM Tenon’s recovery service, said: “Sadly, it’s a return to the old story: northern England used to be geared towards industry, but, judged by proportion of insolvencies, it appears that industry is still deserting it.
“If you make furniture, industrial materials, pharmaceutical, medical and toiletries, or work in the wood, paper and board industry, you have a far higher chance of going bust if your company is based in the North than if its headquarters are below Watford.”
The impact of public sector cuts has yet to have a significant impact on the divide, Mr Jackson added. “It’s tempting to blame the rift on the effect of [spending cuts], especially given that the North – and particularly the North East – is relatively dependent on the public sector compared to elsewhere in the country,” he said.
“However, the proportion of failed public services companies in the North and the South was roughly similar this year.”
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