THE number of active businesses across the North-East has risen by almost four per cent during 2018, but the proportion of regional firms with a raised risk of insolvency has also increased by eight per cent over the same period.

New research by insolvency and restructuring trade body R3 has found a net increase of more than 3,000 firms based in the North-East over the year, with the number rising from 79,600 in December 2017 to 82,700 a year later.

However, the overall proportion of the region's firms with a higher than normal risk of entering insolvency in the next 12 months had hit 41 per cent by the end of 2018, compared to 33 per cent in December 2017.

The proportion of firms judged to be at higher than average risk of insolvency increased in each of the 11 key industries R3 monitors.

In percentage point terms, the hotel sector saw the smallest rise in the proportion of companies at elevated risk over 2018, while the professional services sector saw a rise of 12 percentage points, the highest of all the sectors monitored.

The North-East pub and restaurant sectors have the lowest proportion of companies at higher than normal risk of any region in the UK, while the agriculture and hotel sectors are in second and third place in their respective lists in the latest tables.

Andrew Haslam, chair of R3 in the North-East, said: "It’s good to see that, despite a range of uncertainties swirling around the regional and national economies, the North-East’s entrepreneurial spirit remained in good health through 2018, with an average of over 250 new businesses being set up every month.

"However, with the number of companies at heightened risk of insolvency continuing to rise across the board, this net increase in businesses hides an inevitable truth that many regional firms will also have struggled this year.

“Our leisure industries look to have enjoyed a solid end to 2018, as they would doubtless have hoped, and sectors like transport, agriculture and construction have encouragingly held their own against peers around the UK.

"About the only thing we can confidently predict about the economic climate in 2019 is its unpredictability, and if business owners can see financial problems on the horizon, it’s vital that they look for qualified advice."