2011 saw a widening of the North/South divide, according to figures from RSM Tenon, the UK’s 7th largest accountancy and professional services firm.
Statistics released by the firm revealed that more than 21,000 companies became insolvent in 2011, but fortunes were markedly different at either side of England, with businesses in the North East and North West more than one and a half times more likely to go bust than their counterparts in London and the South.
Roughly 6,100 firms in the North East and North West went under throughout the course of the year – representing one failure for every 40 Northern companies registered at Companies House in January. In the South East, South West and London 9,600 became insolvent – or less than one in seventy. In the East and West Midlands one in fifty firms failed in the same period.
Carl Jackson, head of RSM Tenon’s Recovery service line, said: “It’s tempting to blame the rift on the effect of the comprehensive spending review and the current austerity period, especially given that the North – and particularly the North East – is relatively dependent on the public sector compared to elsewhere in the country. However, the proportion of failed public services companies in the North and the South was roughly similar this year.
“The story is more complicated. Relatively speaking, the sectors which are failing fastest in the North tend to be manufacturing based; 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. 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.”
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