• Wed. Apr 17th, 2024

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R3 North East chair Chris FergusonR3 North East chair Chris Ferguson

Back-to-back months of falling insolvency-related activities in the region shouldn’t lull North East business owners into a false sense of security.

That is the view of Chris Ferguson, North East chair of R3, the UK’s insolvency and restructuring trade body, after new data showed the tide of regional insolvency activities receding from its March peak.

According to R3’s analysis of new data provided by CreditSafe, there were a total of 76 insolvency-related activities, which include liquidator appointments, administrator appointments and creditors’ meetings, in the North East during May – a 17.4% drop from the 92 recorded in April and more than a quarter lower that the March figure of 103.

After hovering around the 60 mark each month through the second half of 2022, the number of insolvency-related activities across the region rose sharply in February and increased again to hit its highest level for a year during the following month.

Despite the subsequent falls, the May figure is still around 16% higher than the 62 insolvency-related activities registered in the same month last year.

R3’s analysis of the CreditSafe data also found that 1,463 new businesses being set up in the North East during May, which is nine per cent higher than the April figure of 1,343 and marginally lower than the 1,509 start-ups founded in May last year.

North East businesses had more than 151,000 invoices on their books in May that had gone past their payment deadline without the money being received, while 12,264 regional firms had invoices outstanding that should already have been settled.

Both these figures are slightly lower than in the preceding month.

Chris Ferguson, who is head of recovery & insolvency at Gosforth-based RMT Accountants & Business Advisors, says: “After three years of incredibly tough trading conditions, any positive news will be welcomed by North East business owners, but these back-to-back falls unfortunately don’t necessarily mean that the issues businesses are facing have gone away.

“Overall corporate insolvency figures are still above pre-pandemic levels, and we’re seeing persistently high numbers of Creditors’ Voluntary Liquidations, generally where owners see no other option than to close down their business.

“We continue to see interest rates edging up and inflation is still more than four times above the Bank of England’s two per cent target, both of which have a negative impact on business costs, consumer confidence and customers’ levels of disposal income.

“While we hope that the coming summer months will bring improvements, North East business owners can’t afford to be complacent in the face of the continuing economic challenges that are impacting us all.

“Any North East firms in financial difficulty should seek professional advice as early as they can, so they can access the widest possible range of potential solutions to give themselves the best possible chance of finding a positive way forward.”