Despite the increasingly pessimistic economic outlook, numbers of businesses in Yorkshire and the Humber experiencing insolvency-related activity saw a decrease last month, falling by 13.1% in September compared with August 2022 – the second largest drop of any of the regions and nations in the UK.
The research from insolvency and restructuring trade body R3, which is based on an analysis of data provided by CreditSafe, shows that while 267 businesses in Yorkshire and the Humber suffered from insolvency-related activities in August, this fell to 232 in September – the lowest number in the region since January.
Yorkshire and the Humber was one of eight regions and nations in the UK which saw a month-on-month drop in insolvency-related activities (which includes liquidator and administrator appointments and creditors’ meetings).
Only four others saw a rise or numbers remaining the same, with the South East experiencing the most dramatic escalation, up by 52.5% since the previous month, followed by Wales (up by 19.5% month-on-month).
However, according to R3’s analysis of the CreditSafe data, Yorkshire and the Humber suffered from a fall-off in the number of business start-ups, decreasing from 4,397 in August to 3,950 in September – a drop of 10.2%.
The region also seeing other indicators of business distress worsening such as late payment of invoices with numbers continuing to creep up, rising from 51,835 in August to 51,962 companies in September which had been unable to meet their payments on time.
Last month, firms in Yorkshire and the Humber had a total of over 812,100 invoices on their books that had not been settled by their payment deadline, with an average invoice value of around £10,656.
Eleanor Temple, (pictured) chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, comments: “While is it somewhat reassuring to see the region holding its own with a drop in insolvency-related activity last month, other indicators of economic distress, such as a fall in business start-ups and an increase in late payments, are slowly but surely on the rise, both here and across the rest of the UK.
“With no sign of global energy markets stabilising, together with turmoil in the markets in the UK in recent weeks, there’s little doubt that business and consumer confidence has fallen to the lowest levels since 2008. The latest ONS figures for August show that the UK economy is already starting to shrink as businesses and households struggle in the face of rising costs, increasing the likelihood that we will fall into recession.”
Eleanor Temple continues: “With the squeeze on consumer spending continuing to stifle economic growth, the region’s businesses should prepare for some challenging times. For those which are already starting to experience financial stress, we urge them to seek advice from insolvency professionals as soon as possible to prevent problems from escalating.”