The number of new North East businesses increased by more than ten per cent between September and October – but the number of insolvency events in the region leapt by over 25 per cent.
According to analysis by insolvency and restructuring trade body R3 of new data provided by CreditSafe, 1,499 new businesses were set up in the North East during October, compared to 1,358 coming into being in September and 1,382 in October last year.
Overall, there have been 14,360 new businesses set up across the region so far this year, an increase of just over five per cent on the 13,652 that had been launched in the ten months to the end of October 2022.
R3’s research also found that there were 90 insolvency-related activities in the region in the month just gone, which compares to 71 insolvency-related activities in September and is 50 per cent ahead of the 60 that occurred in October 2022.
Over 12,200 North East businesses had more than 140,000 overdue invoices on their books during October that should already have been settled, with both figures being slightly lower than September’s equivalent figures.
Chris Ferguson, North East chair of R3, who is a director and head of recovery & insolvency at Gosforth-based RMT Accountants & Business Advisors, says: “The North East has never been afraid to put its ideas into practice, whatever the prevailing economic challenges, and it’s encouraging to see an increasing number of start-up’s across the region.
“In contrast, the corporate insolvency figures for the third quarter of the year across England and Wales were the highest in more than two decades, and this is clearly being felt within the North East economy.
“A combination of rising costs, increased creditor pressure and director fatigue mean more regional firms are turning to a insolvency processes to resolve their financial issues – and after years of battling through the pandemic, many directors appear to have had enough.
“Trading conditions are clearly tough right now, with consumers in particular being more cautious with their money, while costs are rising and the economy remains turbulent.
“The Christmas period is a crucial time for many North East firms, especially those in retail and hospitality, and this year could be make or break for many.
“It remains to be seen whether this year’s Christmas trading period will be the shot in the arm or the final blow for those that are struggling, and we may sadly see a surge in insolvencies in the New Year if it’s the latter.
“As always, our message to anyone worried about their business finances is to seek advice as soon as possible. It can be a hard conversation to have, but speaking to a qualified advisor at the earliest opportunity gives you access to a wider range of options to resolve any financial issues you may be experiencing.”