THERE were signs of optimism in the regional economic outlook after new research found substantial year-on-year falls in signs of distress amongst firms across the north.
Insolvency trade body R3's latest Business Distress Index shows that more regional firms had positive things to say about their commercial performance.

The Business Distress Index (BDI), which reports regularly on the successes and difficulties of hundreds of companies across the UK, showed that the proportion of firms in the North-East, Yorkshire and Humberside reporting decreased profits had fallen by almost a half in the last year to 24 per cent from 49 per cent in spring 2012, and that only six per cent of these businesses were currently maxing out their overdraft regularly, compared to 25 per cent this time last year.
Only eight per cent of firms said they'd lost market share this year, compared to 27 per cent at this point in 2012.

There were also improvements in the number of regional businesses that had been able to invest in new equipment, grow market share recently or had seen sales volumes grow. 
While welcoming the BDI's findings, Steve Ross, chair of R3 in the North-East and a partner in the Restructuring department of the Sunderland office of accountancy firm RSM Tenon, sounded a note of caution about its wider implications, especially in relation to the high number of so-called "zombie" businesses in the region that are still just surviving, rather than thriving.
He says: "After such a prolonged period of economic gloom, good news such as this will be welcomed with open arms, as will any easing of pressure it leads to inside individual firms, but looking at the wider picture, business growth is still very hesitant.

"Decreasing numbers of businesses 'in distress' will not automatically lead to economic growth. Recent data from Experian identified the growth of 'gazelle' businesses, mid-sized firm that have achieved significant growth over the past three years, but these cases are still relatively small and their numbers will have to increase to overtake the zombie numbers which we estimate are still much higher.

"Concerns over utility bills and revenue show that businesses still feel they are being squeezed on both sides. They depend on utilities to operate, making it hard to cut costs, and with consumers unwilling to spend, businesses are likely to be increasingly concerned about their margins.

"Access to credit seems to have become less of an issue, perhaps businesses are getting used to life without easy access to funds, but it could also indicate that many businesses are not even bothering to go to banks for funding "While the numbers of firms experiencing signs of distress may have fallen, they still equate to many hundreds of companies, all of which should be taking decisive action to address and resolve their situations sooner rather than later, so they have the best possible chance of working through their difficulties and substantially enhancing their long-term prospects."