North-east governments fall in first half of year as construction sector continues to suffer

The number of companies in the Northeast region filing for bankruptcy has fallen compared to last year, new research shows.

Insolvency experts Interpath Advisory say there were almost 15% fewer companies calling in administrators in the first half of this year compared with last year – but the organisation said that despite the decline “there are clear hot spots”. Based on data from The Gazette, there were 75 administrations in the region in the past six months, compared with 88 in the first half of 2023, with the construction sector accounting for a quarter of that number.

There have been 19 cases in the sector, including the high-profile collapse of long-standing Newcastle contractor Surgo Construction in March after financial difficulties, followed a few weeks later by the collapse of Murton-based Architectural Glass and Aluminium Limited, which traded as ARGLA, and County Durham-based Aspect Facades. In total, more than 80 jobs have been lost.

There were also 12 cases in the manufacturing sector and six in professional services. These included Sunderland-based electric motor manufacturer Saietta Group and renewable energy technology installer Engenera Group.

The North East figures contrast with the national picture, where the total number of administrations rose slightly to 661 cases in the first half of the year, compared with 657 in the same period last year. Researchers said the consumer markets sector continued to see the most activity, with 123 administrations, including 61 in retail. Construction recorded 101 cases.

James Lumb, Managing Director and Head of the North East Team at Interpath Advisory, said: “The North East has a significant, large-scale business community, so some level of administration is to be expected as part of the natural rhythm of the economy. While the rate of administration is down on last year, there are clear hot spots, notably the construction sector, which accounted for a quarter of this year’s administrations.

“This is happening as corporate governance nationally returns to pre-pandemic levels as the economy unhinges unprofitable and unsustainable businesses. The next few quarters will be crucial to see whether we stabilize at these historic levels of national anxiety, or whether governance continues to move forward and whether the Northeast follows suit.

“Business leaders will be looking for a period of stability from the new government, which can bolster economic confidence and improve visibility into future trading conditions, which is crucial in discussions with lenders, customers and suppliers. Of course, administrations can also be a symptom of businesses failing to keep up with growth or the evolving economic landscape – a reminder that the evergreen principles of sound financial management and the ability to continually adapt and evolve still apply.”