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Home » Tough Start To 2024 For North West Firms As Administrations At Highest Level For Four Years

Tough Start To 2024 For North West Firms As Administrations At Highest Level For Four Years

North West companies have faced a tough start to the year as the number of administrations was at its highest level for four years,

Figures analysed by Interpath Advisory show the region recorded 19 administrations in January 2024. That was the highest January figure since 2020, when there were 21 cases. The North West accounted for more than a quarter (26%) of total administrations across the UK in January.

In 2023 there were 245 administrations across the North West – up 15% on the previous year. The worst-hit sectors were industrial manufacturing (44), business services (40), and building and construction (35).

Across the UK as a whole for 2023, administrations rose more than 25% to 1,307. Interpath said: “sluggish growth, persistent high interest rates, and fragile consumer sentiment continued to impact British businesses.”

Rick Harrison, managing director and head of Interpath’s team in the North West, said: “The number of administrations continues to rise as the financial challenges of recent years take their toll on businesses. For many North West companies, 2023 was difficult despite signs towards the latter end of the year that some of the prevailing economic headwinds might be starting to lessen. We’ve seen a steady and incremental uplift of insolvency activity over the course of the past 12 months and the start of 2024 hasn’t provided much cheer for management teams in the region.”

This week saw confirmation the UK was officially in recession. Mr Harrison said: “With the confirmation that the UK has tipped into recession, the outlook for businesses remains precarious.

“But it’s not all doom and gloom out there. Inflation is proving sticky but didn’t rise as many had expected, we have a resilient domestic labour market and there’s a lot of liquidity in the debt market, which means borrowers continue to have plenty of options. Nevertheless, 2024 will likely remain a period of elevated interest rates by historic standards, and weak consumer confidence will continue to impact those sectors already feeling the pinch.

“To navigate this, North West businesses should look to recognise warning signs and cash pinch points early, and seek appropriate advice. The more time that is available to deal with the issues at hand, the more options and levers are available to pull.”

Global finance firm Kroll also analysed the UK insolvency figures for January. It said most administrations were seen in manufacturing, with 16, followed by Media & Tech (12), construction (11), real estate (11) and retail (7).

Matt Ingram, Kroll’s managing director, said: “Kroll’s forecast for rising administrations is on track as mid-sized businesses start to feel the combined strain of inflation, increased debt servicing costs and subdued consumer demand. We expect these numbers to continue on an upward trajectory, particularly as companies with stretched balance sheets but otherwise compelling business propositions use this process as part of a restructuring strategy with the anticipated return of investor appetite.

“The first set of insolvency statistics for 2024 continue with the trends we saw throughout last year. Liquidations remain high, we expect to see these numbers tail off later in the year but in the short term, with consumer spending still suppressed, we will likely see smaller businesses use this process to wind up their affairs.”

Rebecca Dacre, partner at accountancy giant Mazars, said: “Today’s insolvency figures show just how much businesses have borne the brunt of the recession in the UK. Insolvencies have reached 25,241 in in the past year, a 13% increase on the total of 22,248 recorded in the previous year.

“The toxic combination of stubbornly high interest rates, costs and falling consumer spending have pushed many businesses beyond breaking point.”

“The Bank of England has made it clear that we shouldn’t expect a sharp drop in interest rates so businesses should contingency plan for a slow and shallow recovery rather than a sudden bounce back in the economy.

“The fact that we’re in a recession may only have been announced yesterday but many businesses have known it for a year.”

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