North East businesses are said to be battling to survive.

The latest data from Begbies Traynor, an independent business rescue and recovery specialist, shows rising early signs of financial distress in businesses across the region.

In the first three months of 2024, 32.6 per cent more businesses compared to the same time the previous year demonstrated 'significant' or early-stage financial distress.

Financial distress, defined as deteriorating key financial ratios and indicators including working capital, contingent liabilities, retained profits, and net worth, saw an increase of 7.1% per cent compared with the final quarter of 2023.

These distress signals were reportedly seen in more than 10,250 companies in the North East region.

Across the UK, 30.8 per cent of companies experienced a year-on-year increase in early distress, with a 2.7 per cent rise in significant distress quarter-on-quarter.

Looking into the critical distress figures, there was a 24.8 per cent rise among North East businesses compared to Q1 2023, despite an encouraging 7.2 per cent fall since the previous quarter.

This severe distress affected 776 businesses in the region.

On a national scale, the first three months of 2024 saw a rise of 20.1 per cent in businesses facing critical distress, with a 15.4 per cent fall since Q4 2023.

More than 40,170 UK businesses have been affected.

The analysis of 22 sectors from the North East showed nine seeing double-digit rises in significant distress in the first three months of 2024, compared with the last quarter of 2023.

The sectors hit hardest were food and beverages, having suffered a drastic rise of 36.7 per cent; followed by bars and restaurants with a 31.9 per cent rise; food and drug retailers at a rise of 29.8 per cent; utilities at a rise of 29.2 per cent; industrial transport and logistics at a rise of 27.2 per cent; and sports and health clubs, experiencing a distress signal increase of 20.6 per cent.

Andrew Little, partner for Begbies Traynor in the North East, said: "With inflation slow to fall and consumers feeling the pinch, many businesses both here and across the UK are struggling in the face of falling discretionary spend.

"Added to that, the increasingly uncertain global geo-political situation makes future prospects far from certain."

Partner, Gillian Sayburn, said: "For many, the road to economic recovery still feels a long way away and a return of confidence among both businesses and consumers is not yet evident.

"In such a difficult economic environment, businesses should continue to monitor their finances closely and turn to insolvency professionals for expert advice at the first signs of trouble when more tools will be available to prevent problems from spiralling out of control."