North East business owners are being cautioned to stay alert to the state of their finances after the latest easing of pandemic restrictions came into force.

Alexandra Withers, North East chair of insolvency and restructuring trade body R3, issued the advice after the latest official figures showed another substantial year-on-year increase in the number of business insolvencies across England and Wales.

The Insolvency Service statistics show that there was a 20.1% year-on-year increase from the 1,237 cases of corporate insolvency registered in December 2020 up to the 1,405 cases lodged last month.

Despite the annual increase, the December figure represented a 11.4 per cent month-on-month fall from the 1,678 cases of corporate insolvencies reported in November.

After the mandate for people to work from home wherever possible was removed in mid-January, the end of Plan B restrictions means face masks are no longer mandatory on public transport or in shops, and there is no requirement for people to show covid passes to attend certain events, although organisations can still use them if they choose.

Alexandra Withers, who is an associate director at insolvency litigation financing company Manolete Partners plc in Newcastle, says: “Despite the month-on-month fall in corporate insolvencies, December marked a tough end to a torrid year for many businesses, and they will be clearly hoping for a much happier 2022, especially with the remaining Plan B restrictions now being phased out.

“This is especially true in sectors like retail and hospitality, which normally have their busiest periods in December, but which are unlikely to have recorded anything like their usual returns this time round.

“Increasing Covid cases, rising costs and falling consumer confidence all hit footfall and sales last month, while company directors and management teams also had to work in the midst of new pandemic restrictions, which will have affected day-to-day operations, customer behaviour and revenue levels.

“The annual increase in corporate insolvencies has been driven by a rise in Creditors Voluntary Liquidations, which suggests that the economic situation is pushing many company directors to voluntarily close their businesses before that decision is made for them.

“The further easing of restrictions will hopefully have a positive impact on trade for many businesses, but their owners will still need to remain alert to the state of their finances – and if they see any signs that their business is becoming financially distressed, they shouldn’t ignore them and simply hope for the best.

“R3’s advice for anyone who is worried about their finances is simple: seek advice now. The earlier you do so, the more options you have available, and the more time you have to make a considered decision about which of the potential next steps is right for you.”