Member Article

Leisure and hospitality sectors motor North East recovery

The Leisure and Hospitality sectors in the North East are leading the region’s recovery using revived consumer spending to their advantage.

More consumer spending and business research from Begbies Traynor shows the North East is the region with the strongest corporate recovery in the third quarter of 2013.

Leisure and hospitality businesses such as bars, restaurants and hotels experienced marked decreases in distress levels, as did retail.

The region experienced a 45% reduction in financial distress year-on-year and a 20% reduction in critical distress on the previous quarter.

Across the UK business distress continued to fall, albeit at a slower rate, decreasing 2% in the last three months on top of the previous quarter’s 9% reduction.

Andy Haslam, partner of Begbies Traynor in the North East, commented: “These latest figures are great news for the North East. Having been one of the regions worst hit by the recession, we are now one of those driving the recovery as growth in London slows. Perhaps this could be the beginning of the end of the North South divide.

“We have seen a definite upturn in the fortunes of the hospitality and leisure sectors as consumer confidence has revived following a strong summer of sales aided by the extended period of good weather across the country.

“With market sentiment improving and rising house prices giving homeowners increased confidence, consumer spending is proving to be the engine driving this recovery; good news for the consumer-facing sectors, which are so dependent on a positive Christmas trading period.

“However, with pay growth still lagging behind inflation, this consumer-led improvement could have worrying consequences for the wider economy as new research from the British Bankers’ Association1 suggests that this resurgence is being funded by a rise in household credit, which has increased for the first time in four years. With rising property values prompting still more consumers to increase borrowing, even amid fears of an imminent housing bubble, we are reminded of the boom years prior to the economic downturn of 2008, and hope that this is not a sign of UK consumers repeating past mistakes.”

This was posted in Bdaily's Members' News section by Tom Keighley .