The North is bucking a national insolvency trend with the number of companies filing for administration falling year-on-year despite facing numerous challenges.
Latest analysis of notices in The Gazette by Interpath Advisory showed that total of 44 companies based in the North East and Yorkshire fell into administration in the third quarter of 2023, down from 49 companies in the same period last year, representing a 10.2% drop. The figure provides a chink of hope for the region’s businesses, which have seen improved administration rates in the face of a sluggish economy, the cost-of-living crisis, high interest rates and ongoing geopolitical uncertainty which have combined to impact businesses across the region.
The decrease also contrasts the UK picture which saw a total of 330 companies fall into administration in Q3 2023 – up from 276 companies in Q3 2022, a 19.6% increase on last year, and further evidence that UK insolvency activity is now back to pre-pandemic levels following the record lows seen during 2020 and 2021. However, James Lumb, managing director and head of Interpath’s team in the North East, warned it could be just a momentary respite.
Mr Lumb said: “Whilst the lower level of administration appointments in the region is welcome news, concerns remain that this may be a temporary respite, and that a steady uptick in insolvency activity will soon be back on the cards. In recent months there has been a noticeable shift in approach from creditors, including HMRC, lenders and landlords. Whilst many previously preferred forbearance and restructuring to enforcement, we are starting to see more and more action taken in the form of winding up petitions.”
The rising number of UK insolvencies in the third quarter of the year can be seen across a wide range of sectors, with companies operating in the building and construction, professional services, retail and real estate industries experiencing a notable number of appointments.
Mr Lumb added: “Q4 is the so-called ‘Golden Quarter’ for retailers, and many will be hoping that recent data around falling inflation and a pause in interest hikes will be enough to tempt shoppers to spend. All eyes will be on the crucial Black Friday and Cyber Monday events in November, as an early indicator for what Christmas trading might bring. Particular focus will be on bigger ticket household purchases, where anecdotal evidence suggests demand has been soft.
“With the Chancellor ruling out the possibility of tax cuts this Autumn, wider geopolitical events, and a 2024 general election on the cards, the outlook for our regional businesses remains cautious. As cost of living pressures and high borrowing costs are likely to continue, a combination of short-term cash visibility, and long-term planning will be critical for businesses and management teams to ensure they remain resilient.”
Original artice – https://business-live.co.uk/all-about/yorkshire-humber