With an increasingly pessimistic outlook for the UK economy, businesses in Yorkshire and Humberside already appear to be facing growing pressures as the value of debt owed by companies in liquidation in the region spiralled by 201% in June 2022 compared with the previous month.
Research from insolvency and restructuring trade body R3, which is based on an analysis of data provided by CreditSafe, shows that although the number of businesses going into liquidation with debt in the last month has fallen from 271 to 201 (-26%) in the region, the total debt they owe rose from a total of £1.5m in May to £4.5m in June.
Two other regions had higher increases in the total value of debt owed by companies in liquidation month on month – the South West (up 280%) and the East Midlands (up 203%).
The research also showed that insolvency-related activities in the region had increased for the second month in a row. This type of activity, which includes liquidator and administrator appointments and creditors’ meetings, affected 257 businesses in Yorkshire and Humberside in June, up from 244 in May and 238 in April, an increase of 8% across the three months.
Across the UK, the picture was mixed with the only regions seeing double-digit growth in insolvency-related activities being Northern Ireland (up 62%), the North East (up 59%) and the West Midlands (up 49%). In contrast, the North West (down 3%), Scotland (down 8%), the South West (down 6%) and Wales (down 4%) all saw a fall in insolvency-related activity in the last three months.
Eleanor Temple, (pictured) chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, comments: “While the UK economy unexpectedly returned to slight growth in GDP in May after a decline in April, the outlook is still very uncertain for businesses in Yorkshire across the UK as it’s yet to be seen whether that growth can be sustained and a recession can be avoided.
“The surprise growth in GDP in May appears to have been largely driven by a boom in holiday bookings and a big rise in GP appointments, however, the figures already revealed a worrying decline in consumer-facing services with falling retail sales and a slump in sports activities and recreation. Unfortunately, these early signs of the impact of the high cost of living squeezing disposable income are set to continue as households struggle to cope with hikes in energy costs over the winter.”
Temple continues: “It is a worrying time given the combination of pressures on the economy and in this uncertain environment, we urge any business which are starting to struggle to seek qualified help as soon as possible when more options will be available to them. There are many tools that can be deployed by insolvency professionals to help companies get back on track.”