Small and medium-sized UK businesses have been urged to seek professional advice to help them adapt to tough market conditions and rapid industry changes, amid a sharp increase in UK insolvency activity. New data has revealed that insolvency-related activity increased in every UK region bar Northern Ireland in February.
An analysis of Creditsafe data by the UK’s insolvency and restructuring trade body R3 showed that there were particularly sharp increases in activity in the East Midlands (up 79 per cent) and South West (up 77 per cent) compared to the figures recorded in January.
Yorkshire and the Humber also recorded a significant increase in activity (39 per cent), while Northern Ireland saw a drop of 38 per cent. Creditsafe’s data covers appointments of liquidators and administrators, as well as creditors’ meetings.
Data also revealed that the number of new business startups decreased across every English region during February, with the exception of Yorkshire and the Humber, which saw a marginal increase of 0.2 per cent. Scotland, however, registered a 9 per cent increase, while there were also small increases in Northern Ireland and Wales.
Commenting on the findings, Dave Broadbent, chair of R3 in Yorkshire and partner at Begbies Traynor in York and Teesside, said: “With SMEs as ever bearing the brunt, UK business is contending with a multitude of challenges that are threatening stability and growth right now, and so unfortunately both the hike in insolvency-related activity and the disappointing growth in new startups come as little surprise.”
Broadbent added that there was a “worrying decline in borrowing as businesses see their peers struggling to manage debt”, as well as mounting concerns surrounding the Employment Rights Bill and its associated costs, which are leading some firms to cut back on investments and hiring.
Broadbent also mentioned trade barriers and the persistently cautious consumer spending as factors in the dampening of business activity across a wide array of sectors.
He concluded: “That said, SMEs are well known for their resilience and optimism in the face of adversity and it is always vital to bear in mind the invaluable role professional advice can play in helping businesses to adapt and change course rather than becoming a victim of economic headwinds.”
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