NEARLY half of all companies in the south east face a higher than average risk of insolvency, a Southampton insolvency expert has warned.

But the region is still characterised by “entrepreneurialism and innovation”.

Insolvency and restructuring body R3 found the percentage of firms at elevated risk – 44.9 per cent – was the highest of any region in the UK.

It compared with a national figure of 44.1 per cent, according to R3’s November insolvency risk tracker.

The figure reached 49.3 per cent in the south east’s professional services sector – the highest for any sector in any region of the UK.

The next highest sector figures were technology and IT (47.3 per cent), construction (47.2 per cent) and retail (40.6 per cent), followed by tourism and the transport and haulage sector, both on 39.9 per cent.

However, agriculture (34.2 per cent), restaurants (35.1 per cent) and hotels (35.2 per cent) had the lowest percentages are higher risk.

Agriculture was the only sector in the region to buck the national trend, with 36.2 per cent of UK firms at higher risk.

Mike Pavitt, partner with Southampton law firm Paris Smith and the chairman of R3’s southern committee, said: “Although research shows the south east has the highest proportion of firms at elevated risk of insolvency in the UK, it is a region characterised by entrepreneurialism and innovation.

“Young firms and start-ups are among those with a greater than usual risk of insolvency early in their growth trajectory, which has an impact on the research figures.

“More broadly, the south east followed the same sector-specific trends as other regions,” he added.

“Retail also continues to face considerable headwinds, as demonstrated by the recent problems experienced by Mothercare, Clintons and Mamas & Papas and performance in the upcoming Christmas period may prove critical for others in this sector.”

Mothercae and Mamas & Papas both went into administration, while Clintons is looking to close more stores and asking many landlords to accept less rent.

R3’s insolvency risk tracker is compiled using Bureau van Dijk’s Fame database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months. R3’s southern committee includes Buckinghamshire, Oxford, Hampshire, Isle of Wight, Berkshire, and Wiltshire.