Despite concerns about the threat of a UK recession, the latest research from the UK’s restructuring trade body R3 shows that in January 2023 a smaller number of businesses in Yorkshire and the Humber experienced insolvency-related activity than at any time in the last 12 months.
R3’s research for last month, which is based on an analysis of data provided by CreditSafe, shows that there were just 207 businesses in Yorkshire and the Humber experiencing insolvency-related activities, the least since January 2022 when there were 150 business. The figures for January 2023 also reveal a 20% fall since December 2022 when there were 259 businesses in the region in this situation.
A month-on-month drop in levels of insolvency-related activities (which includes liquidator and administrator appointments and creditors’ meetings) was reflected across all eight regions and nations. The East Midlands saw the greatest decrease since December (down by 41%), followed by West Midlands (-35%) and East Anglia (-34%); while the North East (down by 3%), Wales (-9%) and experienced the smallest falls, and activity rose by 12.5% in Northern Ireland
Looking at other indicators of financial distress, R3’s analysis of the CreditSafe data showed there was once again an increase in the number of business start-ups in Yorkshire and the Humber in January, rising from 3,295 to 4,414 last month – a 34% uplift.
The region also saw a slight fall in the number of businesses which had been unable to meet their payments on time with late payment of invoices falling from 47,550 in December to 47,021 last month.
January also saw a fall in the number of invoices on the books of firms in Yorkshire and the Humber that had not been settled by their payment deadline, decreasing from 561,419 in December to 527,4448 last month.
“After ending the year amid the gathering storm clouds of spiralling inflation, exacerbated by legacy Covid debt and falling consumer demand, the figures for January are less alarming than many had feared, but perhaps mask some of the strain businesses are feeling, both here and across the UK,” comments Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds.
“While it is certainly reassuring to see that levels of insolvency-related activity appear to be steadying as we head into 2023, given global economic uncertainty in the face of the continuing conflict in Ukraine, directors would be well advised to proceed with caution and assume that the worst is not yet over.
“Anecdotally, we are hearing that many businesses are hanging on by their fingernails and, with energy costs due to rise again after April 2023 when Government assistance is withdrawn, we fear there is likely to be a further spike incorporate insolvencies. Given the current outlook, it is best to seek advice from insolvency professionals at the first signs of business distress.”