THE region’s businesses continue to struggle ahead of the full impact of public sector cuts and tax rises.

The North-East remains one of the most challenging areas of the UK, with 4,155 companies in the region facing significant or critical financial problems, according to the latest quarterly Red Flag Alert issued by Begbies Traynor, a business recovery specialist.

The report, which monitors the early warning signs of company problems, shows there has been little improvement year-on-year, with 4,155 North-East businesses facing distress in the last quarter of 2009.

Andy Haslam, of Begbies Traynor, in Newcastle, said: “Today’s figures show that North-East businesses are continuing to demonstrate real signs of distress and that trade creditors are both losing patience with their debtors and in need of collecting cash into their own businesses.

“Coming against a backdrop of the largest decline in house prices for a year, higher inflation, an accelerated decline in business confidence, and higher unemployment forecasted for 2011, these figures indicate the renewed challenges facing businesses across most industries in 2011, particularly in the small and medium-sized enterprise sector.”