North East insolvencies rose at the highest rate in the UK in the summer, new figures show.
The number of regional business which reported insolvency events in August grew by 22%, according to analysis by insolvency body R3 of new data from CreditSafe. The figure outstripped all other regions, some of which reported a drop.
R3’s research found that there were 95 insolvency-related activities, which includes liquidator appointments, administrator appointments and creditors’ meetings, across the North East during the month, compared to 78 in the preceding month. The 686 insolvency-related activities across the region during the first two-thirds of 2023 compared to just 569 in the same period last year, an increase of over 20%, while the August figure is more than 50% higher than the 61 recorded in the same month last year.
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The North East figure outpaced other regions including the South East where they jumped 18% and East Anglia, which saw a 15% increase. Other areas also saw an improvement including the East Midlands (-19.6%), Wales (-11.8%) and London (-0.9%).
R3 said that more than 12,300 North East businesses had more than 152,000 overdue invoices on their books during August that should already have been settled – numbers broadly in line with figures for July. Creditsafe data also showed 1,461 new businesses were established in the North East during August, increasing from 1,386 in July and 1,358 in June.
Chris Ferguson, North East chair of R3, who is director of recovery & insolvency at Gosforth-based RMT Accountants and Business Advisors, said: “While it’s always encouraging to see start-up numbers growing in the region, concerningly the corporate insolvency numbers are well above pre-pandemic levels. The economic issues that we’re all experiencing clearly continue to bite and these latest figures are stark evidence that trading conditions for most business will continue to be challenging for the foreseeable future.
“Costs are rising at a time when people are cutting their spending back, leaving businesses facing the challenge of shrinking revenues and tightening margins. Businesses now face the tough decision whether to absorb these cost increases or pass them onto customers, which can be a difficult balance to get right.
“Sat alongside this, demands for wage increases and higher energy bills continue to hit businesses hard.
“Late payment problems remain stubbornly present for many North East firms, and with delayed payments often being a significant factor in many business failures, they can have a far wider impact than just on a distressed business itself. The end of summer can traditionally be a quiet time for many companies, so if company directors feel they’re not entering autumn period in their best shape, we’d urge them to look for qualified advice as soon as possible, so they can maximise the options available to put things right.”
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