FEWER businesses in Yorkshire are getting into trouble.

Levels of critical business distress have fallen by seven per cent in the second quarter of 2011 compared with the same period of 2010.

Figures released by leading business rescue and recovery specialist Begbies Traynor show that the region is outperforming other parts of the country as the UK average shows a slight rise in levels of distress of 1.4 per cent year on year.

The firm’s quarterly Red Flag Alert statistics reveal that across the UK, 99,194 companies are facing “significant” or “critical” financial problems according to figures from April, May and June 2011. A total of 6,116 of these are based in Yorkshire and Humberside.

The Yorkshire figures are a dramatic fall (47 per cent) from the first quarter of the year which saw a total of 11,576 instances of distress.

However, seasonal trends account for almost all of this fall as historically the peak of retail and hospitality sector business distress occurs just after the Christmas period and “significant” problems are materially higher in the first quarter because of the volume of overdue accounts due to be filed by 31 December.

Also many struggling companies are continuing to make use of the Inland Revenue’s Time to Pay scheme which is providing temporary breathing space.

Julian Pitts of Begbies Traynor said: “We welcome any statistics that suggest that Yorkshire grit is starting to show through and businesses are beginning to recover as the region is among those that have borne the brunt of the recession over the last three years.

“However, to keep this in perspective, we have seen only a relatively small reduction of problems in percentage terms and, in fact, there were 344 instances of critical business distress in the region.These figures show that the business environment is still challenging in Yorkshire and the picture across the country remains fairly gloomy.”