As the UK faces a raft of economic challenges, December proved to be the most challenging month of 2022 for business start-ups in Yorkshire and the Humber with the lowest monthly total for the year registered last month, down 29% compared with November 2022 and 21% fewer than the number of start-ups in December 2021.
The research from insolvency and restructuring trade body R3, which is based on analysis of data provided by CreditSafe, shows that in December 2022, 3,295 new businesses were launched in the region – 1,371 less than in the previous month. This picture is reflected across the UK with all 12 regions and nations recording a fall in the number of start-ups registered since November. The biggest month-on-month decrease was in Wales with a 37% fall, followed by East Anglia, Northern Ireland, the North East and the South West (all down by 33%).
December 2022 also saw insolvency-related activities in Yorkshire and the Humber creeping up by 1%, with all but two other regions seeing a drop in insolvency-related activity month-on-month from November to December. Only the East Midlands (up 3%) and Greater London (up 1%) saw insolvency activities (which includes liquidator and administrator appointments and creditors’ meetings) increase month-on-month. The biggest fall in insolvency-related activity occurred in Wales (down 32%) and Northern Ireland (down 27%).
The research also showed another indicator of business distress, late payment of invoices, increasing in Yorkshire and the Humber, from 47,383 companies with late payments in November to 47,550 companies in December which had been unable to meet their payments on time.
The number of invoices on the books of firms in Yorkshire and the Humber that had not been settled by their payment deadline was up by almost 13,000 invoices, from 548,422 to 561,419.
Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, comments:
“Whilst some established hight street names reported encouraging results in their Christmas trading updates, the current economic outlook seems to be proving a deterrent to would-be entrepreneurs. With discretionary spending squeezed by the cost of living challenges and inflation rates at their highest since the early 1980s, it’s not surprising that less people are registering new business start-ups given the risks involved in such an uncertain climate.”
“Insolvency-related activities are once again on the rise as many sectors try to deal with the impact of increased costs, staff shortages and customers reining in spending post-Christmas. Some sectors look set to be hard hit with reports of Britain’s pubs and restaurants cutting their opening hours as well as their menus in an attempt to curb rising operational costs. The continuing rail strikes are also having a detrimental effect on the beleaguered hospitality sector with industry bodies citing the cost of the rail strikes on bars, pubs, restaurants and hotels in the UK as at least £1.5bn in December alone. Undoubtedly, many businesses have entered 2023 in an extremely fragile and vulnerable position.”
“Given the current economic challenges, it is vital that firms in the region start 2023 with the right plans and support at hand. Those that are already starting to see signs of financial distress should waste no time in seeking professional advice; the earlier that insolvency practitioners are involved, the more tools they have at their disposal to help companies improve their situation.”