North-South divide revealed in rate of business failures

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Businesses in the North are more likely to go bust than their southern counterparts, according to a report out today that echoes the UK's traditional geographical divide.

Businesses in the North are more likely to go bust than their southern counterparts, according to a report out today that echoes the UK's traditional geographical divide.

Nine out of the 10 towns in mainland Britain with the highest company failure rates were in the North or Midlands, a survey by R3, the Association of Business Recovery Professionals, showed.

Across England and Wales, six of the 10 least failure-prone locations were in the South, according to a survey of all companies failures in the 18 months to June last year. Paradoxically, the town with the highest failure rate was Peterborough in East Anglia, where businesses were more than five times as likely to go the wall as the average.

R3 measured the number of failures as a proportion of solvent companies and found almost 5 per cent of firms in Peterborough failed compared with less than one in 100 across the UK. On a sectoral basis, R3 said there had been a massive rise in insolvencies among business-to-business service companies, mirroring the collapse of the dot.com boom four years ago.

Insolvencies among retailers were low but R3 warned this sector could be at risk if the consumer credit boom that has protected it comes to an end. Gareth Hughes, R3's president, said: "Should rates rise further, we could see consumer spending plummet - and consumer insolvencies rise massively."

Meanwhile, fears about the cost of raw materials among the UK export community have escalated and have hit export confidence levels, according to a survey for DHL. More than half of manufacturing exporters were worried about rising costs, the highest level in the survey's 12-year history.