As hopes grow that a UK recession can be avoided, the number of businesses in Yorkshire and the Humber experiencing insolvency-related activity fell by 7% in April compared with March 2023, the first decrease since January.
The research from insolvency and restructuring trade body R3, which is based on an analysis of data provided by CreditSafe, shows that while 283 businesses in Yorkshire and the Humber suffered from insolvency-related activities in April, this fell to 262 in March.
Last month, all nine of the English regions surveyed saw a fall in insolvency-related activities (which includes liquidator and administrator appointments and creditors’ meetings) with the largest decreases recorded in East Anglia (down 25%), the South West (down 25%) and the East Midlands (down 24%). Of the other nations, Northern Ireland recorded the same level of insolvency-related activities from March to April, whereas Wales and Scotland saw an increase in insolvency-related activities at 10% and 12% respectively month-on-month.
Looking at other indicators of financial distress, R3’s analysis of the CreditSafe data, Yorkshire and the Humber saw a fall for the second month in a row in the number of businesses which had been unable to meet their payments on time. The late payment of invoices fell from 48,244 in February to 47,173 in March and 46,890 in April. This trend was reflected across all of the regions and nations surveyed.
There was also a decrease in the number of invoices on the books of firms in the region that had not been settled by their payment deadline for the second month in a row, down from 540,399 in February to 530,283 in March and 528,891 in April. Bad debt, the debts owed by companies in liquidation, was also down by 45% from 279 in March to 153 in April.
However, it was not all positive news with the number of new businesses starting up in the region falling by 19% from 5,315 new start-ups in March to 4,290 in April. This pattern was mirrored across the UK regions and nations with the largest falls seen in the North East and the South East (both down 23%). The smallest falls in the number of new start-ups registered were in Northern Ireland (down 10%) and Wales (down 14%).
Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, comments: “With recent news from the IMF that the UK is this year expected to be the worst performing economy of the G7, there’s no doubt that there are still tough times ahead. The combination of high imported energy costs, plus a tight labour market and higher interest rates to fight inflation, has already resulted in many consumers tightening their belts.”
“In such a challenging environment, it is encouraging to see businesses in the region, and across much of the UK, performing so strongly, albeit with falls across the UK in the number of start-ups registered. However, a word of warning – we fear the worst may not yet be over; businesses should be alert to the first signs of financial difficulties and seek professional advice as early as possible when there will be more tools available to prevent problems from escalating.”