Amidst increasingly bleak predictions for the UK economy, the number of businesses in Yorkshire and Humberside experiencing insolvency-related activity is once again on the rise.
Research from insolvency and restructuring trade body R3, which is based on an analysis of data provided by CreditSafe, shows that insolvency-related activities in the region are increasing again after a drop in April. This type of activity, which includes liquidator and administrator appointments and creditors’ meetings, affected 601 businesses in Yorkshire and Humberside in March, falling to 238 in April (down 60%) and rising to 244 in May (up 6%). Overall, the region has seen a 63% increase in insolvency related activities since the start of the year.
Looking across the rest of the UK, only three regions saw a higher overall increase in insolvency-related activity than Yorkshire and the Humber between January and May. The West Midlands experienced the highest overall increase with a 87% uplift, followed by the East Midlands (up 76%), and Northern Ireland with a 67% rise. Only the South East saw an overall decrease in insolvency-related activity (down 3%) so far this year.
R3’s analysis of the CreditSafe data also showed a steady increase in the late payment of invoices, one of the key indicators of business distress.
In April just over 51,100 companies in Yorkshire and Humberside owed money having been unable to meet their payments on time which rose by 315 companies to 51,423 in May. Last month, the region’s firms had a total of almost 765,000 invoices on their books that had gone past their payment deadline without being settled (up by 12,135 from April), with an average invoice value of around £10,500.
Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, comments: “With the news that, in April, the economy contracted for the second month in a row, the first time this has happened since Covid struck, it’s no surprise that businesses in Yorkshire and across the UK are struggling in the face of record-breaking fuel and energy costs.
“Pressure is being felt across all sectors with services, manufacturing and production all shrinking in April. As we see prices rising at their fastest rate for 40 years and inflation forecast to reach more than 10% by the end of the year, both households and businesses are being impacted and the threat of recession appears to be looming ever closer.
“For any businesses that are experiencing insolvency-related issues, it is vital that they seek qualified help as soon as possible – insolvency practitioners have a wide range of tools at their disposal that can help companies get back on track.”