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October 17, 2011

Regional economic divide widens

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by Gill Montia

Regional economic divide widens

House prices across most of England and Wales are taking up the impact of an ever-widening economic divide, with latest figures from Begbies Traynor highlighting regional levels of financial distress among businesses.

According to the insolvency specialist, the North East, North West, Yorkshire, the Midlands, the East of England and Wales have all seen a rise in the number of firms in “significant” or “critical” distress in the last three months.

Meanwhile, London and the South East have actually experienced a decrease in financially stretched businesses.

Hardest hit with struggling enterprises is the beleaguered North East, where house prices are already down 7.8% year-on-year, according to the Land Registry.

In the last quarter, the region has seen a 19% increase in distressed companies, followed by the North West with a 12% rise.

Yorkshire, the Midlands, Wales and the South West regions all saw increases in business distress of 10%.

In Scotland, where public sector cuts have come much later than in the rest of the UK, levels of distress are still falling quarter-on-quarter.

However, the impact of recent and expected future cuts will surely be felt at some point.

Begbies Traynor executive chairman, Ric Traynor, comments: “As the threat of public sector job cuts became a reality in the past few months, a North South divide has begun to emerge with the South East and London areas showing much greater economic resilience than the rest of England and Wales.”

He adds: “Many of the regions worst affected – such as the North East and North of England – are heavily dependent on the public sector so it is telling that these areas are witnessing increased levels of financial distress.”

Figures from The Office for National Statistics (ONS) show that in the second quarter of 2011 the number of public sector employees fell by 111,000, marking the biggest decline since ONS records began in 1999.


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