Yorkshire and the Humber, along with many other parts of the UK, saw a worsening economic picture in June as businesses struggle in the face of falling consumer spending resulting in the region seeing levels of insolvency-related activity increasing by over 20% compared with May 2023.
According to the latest research from insolvency and restructuring trade body R3, which is based on an analysis of data provided by CreditSafe, Yorkshire was one of four regions and nations across the UK which saw a month-on-month rise in insolvency-related activity (which includes liquidator and administrator appointments and creditors’ meetings). Those seeing the largest increases were Wales (up by 27.9%), followed by the South West (26.9%), the North East (26.3%) and Yorkshire (20.7%).
In fact, the rise in insolvency-related activity in Yorkshire last month, up to 274, was the largest number seen by the region in the last 16 months since its peak of 601 in March 2022, and March 2023 when it reached 283.
Of the 12 regions and nations, just five saw falls in levels of insolvency-related activity since May, with the East Midlands (down by 15%) and the South East (-11.2%) performing most strongly; followed by East Anglia (-3.2%), the North West (-2.3%) and Greater London (-1.2%).
Looking at the number of start-ups in June, another indicator of economic health, there was a decrease in levels of new businesses since the previous month in all parts of the UK with Yorkshire and the Humber seeing the greatest fall. The region saw start-ups decrease from 4,782 in May to 4,182 in June, a drop of 12.5%. East Anglia, the West Midlands and Northern Ireland also all experienced month-on-month falls of over 12% while the East Midlands (-6.3%), the North East (-7.2%) and the North West (-7.9%) saw the smallest falls.
Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, said: “We are now starting to see the negative impact of rises in the cost of living and escalating interest rates as businesses feel the bite of households’ reduced disposable income. Unfortunately, With the squeeze on consumer spending looking set to continue, the prospect of the UK sliding into recession is a very real risk.
“While Yorkshire has a strong track record of performing relatively strongly despite adverse economic conditions, there’s no doubt that there are some major challenges ahead as food inflation continues, mortgage rates edge upwards and energy prices are predicted to remain high next winter. With more financial pain likely, directors would be well advised to keep a close eye on cash flow and turn to professionals for advice at the first signs of trouble when the most tools will be available to prevent problems from escalating.”