THE North-East has the worst insolvency record in the country, according to new figures.

A new survey showed 708 firms in the region were declared insolvent in 2012, which was a 15 per cent rise on cases throughout 2011.

The increase is the highest in the UK and comes against a marked drop in the number of firms going bust in Scotland and Wales, Yorkshire, the East Midlands and the South West.

A report from information services company Experian said there had been a rise in insolvencies from large businesses and firms in the service sector.

However, Steve Ross, North-East chair of insolvency trade body, R3, said the region was beginning to turn the corner.

Mr Ross, a director in the corporate recovery department at accountants RSM Tenon, based in Sunderland, said he was cautiously optimistic over businesses' futures in 2013.

He said: “Last year was a difficult year, but we are starting to see some signs that things are turning around.

“We are getting positive feedback from businesses but it will be a long and slow process.”

According to the report, insolvencies fell nationally from 1.10 per cent to 1.04 per cent, with the amount of firms failing in December dropping to a low last seen in December 2007.

The survey said medium-sized businesses, employing up to 100 workers, had shown the greatest improvement, as insolvency rates fell from 2.22 per cent to 1,83 per cent in 2012, though the IT industry had experienced a difficult year.

Max Firth, managing director of Experian business information services, said: “We saw the business insolvency insolvency rate fall in 2012 and remain stable throughout the year.

“Firms that suffered most during the downturn were actually the ones to see the most significant improvements.

“The rate of insolvencies is significantly lower now than when it was at its peak in 2009, but there is still a way to go before we reach the pre-recession rate of 2007.”

“Firms need to remain prudent in order to prosper, and by sharing data with credit reference agencies, businesses can improve their own credit rating to ensure they are in the best position to secure deals.”