As economic headwinds continue to gather, businesses in Yorkshire and the Humber, along with those in the rest of the UK, are already starting to feel the impact of mounting financial pressures with a marked month-on-month rise in the number of businesses in the region experiencing insolvency-related activity.
The latest research for November 2022 from insolvency and restructuring trade body R3, which is based on an analysis of data provided by CreditSafe, shows that last month there were 257 businesses in Yorkshire and the Humber experiencing insolvency-related activities, a rise of 19% since the previous month, with just 216 in October.
In fact, all eight regions and nations across the UK saw a rise in insolvency-related activities (which includes liquidator and administrator appointments and creditors’ meetings) since the previous month.
The biggest month-on-month increase was in Wales with a 110% rise, followed by the South East (up by 59.1%) and Northern Ireland (up by 37.5%). Yorkshire and the Humber was among the best performing, with only the North West (6.6% rise), the North East (15% rise) and East Anglia (16% rise) seeing lower increases.
Despite the current economic challenges, R3’s analysis of the CreditSafe data also showed a slight uplift in the number of business start-ups in Yorkshire and the Humber, increasing from 4,590 in October to 4,666 in November – a small rise of 1.7%.
Another indicator of business distress, late payment of invoices, also showed a slightly more optimistic picture in Yorkshire and the Humber this month, falling from 52,154 companies with late payments in October to 47,383 companies in November which had been unable to meet their payments on time.
Last month, while there were 548,422 invoices on the books of firms in Yorkshire and the Humber that had not been settled by their payment deadline, this was a significant fall since the previous month when the figure was 825,938.
Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, comments: “Amid ongoing bad news about the UK’s economic prospects, it appears that negative pressures, both in terms of spiralling costs and falling consumer demand, are already starting to bite. In Yorkshire and the Humber, and indeed across all of the regions and nations, November saw a month-on-month rise in insolvency-related activity, during what should be one of the busiest periods of the year.
“The current wave of industrial action is also adding to some sectors’ woes, for example many restaurants and hotels are seeing work Christmas parties cancelled in the face of further rail strikes and there is uncertainty in the travel sectors as airports cope with strikes by border force officials. Given the fact that both hospitality and travel have already suffered from two disappointing festive seasons with Covid lockdowns curtailing activity, it could prove to be the last straw for some businesses.”
Eleanor Temple continues: “However, Yorkshire and the Humber is once again showing resilience with some of the other indicators of economic distress, such as levels of business start-ups and the number of late payments, falling slightly since October. There’s no doubt that it is going to be a tough winter for many, and businesses would be well advised to get help from insolvency professionals at the first signs of financial problems.”