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Companies showing fewer signs of distress

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Manufacturing in the region is on the road to recovery and the overall number of companies in distress is falling year on year according to Begbies Traynor’s red flag alert.

It shows the East of England region had 3,927 significant problems in the first quarter of this year, 20 per cent down year on year, although this was up 38 per cent compared to the final quarter of 2011. There were 101 critical problems in the same period, down 14 per cent and 31 per cent respectively.

Mary Currie-Smith of Begbies Traynor's Cambridge office said: "Tough seasonal trading conditions usually create quarter-on-quarter increases in distress in January, February and March each year. Some sectors such as retailing and construction are yet to see improvements, but the overall fall in distress compared to 12 months ago is a sign of some momentum towards overall recovery."

Cambridge had 951 significant problems in the first quarter of this year, up 118 per cent year on year and up 93 per cent compared to the final three months of 2011. It had just 12 critical problems in the same period, up 50 per cent and down 37 per cent respectively.

Nationally, the underlying year-on-year trend showed a fall of 17 per cent in combined distress - when compared with the same period in 2011 - which indicates early progress away from another recession. Key manufacturing centres, including London, Manchester and Birmingham have seen falling critical distress over the past quarter when compared with the previous three months, and also compared to a year ago. Food and beverage producers' distress fell by 37 per cent; print and packaging firms saw 73 per cent fewer instances of distress; and other manufacturing businesses saw distress levels fall by 49 per cent.

However significant problems in the property services sector (which showed a 122 per cent increase in distress) and the construction sector (which showed a 104 per cent increase in distress) in the first quarter of 2012 reflect the impact of public spending cuts.

Ric Traynor, chairman of Begbies Traynor Group, said: "We have seen numerous construction firms, contractors and suppliers restructure or withdraw from markets recently, and there are concerns that the impact of the sustained spending freeze on this sector is being masked by the fact that many sub-contractors are not immediately counted in government unemployment numbers."

Last Updated ( Thursday, 01 November 2012 08:35 )