The North East recorded a seven per cent year-on-year increase in the number of new businesses set up through the first quarter of 2023 – but regional insolvency activities were also still firmly on the rise.
According to analysis by insolvency and restructuring trade body R3 of new data provided by CreditSafe, there were 4,492 new businesses set up in the North East during January, February and March, compared to 4,187 in the same period last year.
March alone saw 1,740 start-ups established, a figure 15 per cent higher than for the same month last year (1,572), which was itself the highest monthly figure recorded in 2022.
However, the same month also saw the number of insolvency-related activities in the North East also hit its highest point in a year.
There were a total of 103 liquidator appointments, administrator appointments and creditors’ meetings in the North East in March, an increase of 18 per cent from the 87 recorded during February, which was in itself a 48% increase from the 59 insolvency-related activities that occurred in January.
It’s the first time that the monthly figure had reached three figures since March last year, which was immediately before the last of the government’s temporary pandemic insolvency protections were removed.
R3’s analysis of the CreditSafe data also found that North East businesses had more than 157,830 invoices on their books in March that had gone past their payment deadline without the money being received, while over 12,400 regional firms also had invoices outstanding that should already have been settled.
Both these figures were slightly lower than their February equivalents.
North East chair of R3 Chris Ferguson, who is head of recovery & insolvency at Gosforth-based RMT Accountants & Business Advisors, says: “Our region’s entrepreneurial spirit has always been its defining characteristic, no matter the prevailing economic conditions, and these latest quarterly figures clearly show that the North East’s ambition to succeed is as robust as ever.
“The region saw the failure of some well-known firms during the first quarter of this year and, where this happens, there can often be a knock-on effect for smaller firms in the supply chain. I imagine it’s likely that some suppliers will unfortunately have fallen victim to the problems of other businesses.
“Late payment remains a persistent problem both for the regional and national economy, given it directly impacts the cashflow of businesses that may already be struggling in the current economic climate.
“There are clearly still tough times ahead this year, and North East owner/managers should continue to seek qualified advice if they are experiencing financial issues.
“As always, early intervention provides access to the widest possible range of potential solutions to restructure a business, which will ultimately provide the best chance of resolving financial difficulties.”