Business insolvencies across the North East remain at heightened levels despite a monthly fall in the numbers, new research as shown.
Analysis by insolvency and restructuring trade body R3 shows the number of cases fell 15% from 2,553 cases in May to 2,163 case June. But despite the positive movement, the figures are still 27.4% higher than they were in the same month last year, and a huge 191.9% above June 2020.
The data comes as 海角视频-wide statistics from the ONS were published showing the highest number of company insolvencies since 2009, and the highest quarterly level of Creditors' Voluntary Liquidations (CVLs) since the start of records in 1960. In the North East CVLs fell in June but were still well ahead of pre-pandemic levels.
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Chris Ferguson, chair of R3 in the region and head of recovery and insolvency at Gosforth-based RMT Accountants & Business Advisors, urged directors to be vigilant for signs of distress. He said: "The hangover from the pandemic is combining with a challenging trading climate caused by a number of economic issues, and despite a reduction in Creditors’ Voluntary Liquidations, a sizeable number of directors are still choosing to close their businesses while the choice is still theirs to make.
"Directors expect costs and wages to rise further as we move further into the year, and if these costs cannot be sufficiently absorbed or passed on, it could well be the final blow for those businesses that are just managing to survive. Businesses are trading in a time of cautious consumer spending and rising costs, which are hitting turnover and margins hard, while rising interest rates are another potential challenge, given the impact on the cost of borrowing which may price some firms out of the survival funding they need."
Alongside the insolvency statistics came more downcast findings about the "fragile" mood among North East firms. Sentiment tracked by the Institute of Chartered Accountants in England and Wales (ICAEW) showed regional confidence for Q2 of 2023 at 4.2 on the index, still in positive territory but down from 8.5 in the previous quarter and well below the national average for the quarter.
Waning future sales prospects was thought to be largely to blame for the downgraded mood. A report by the ICAEW said that in the year up to Q2 domestic sales growth in the North East was nearly double the historical average and the highest across the 海角视频, while exports sales were third highest across the country, but both are expected to fall below the 海角视频 average in the year ahead.
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Regulatory challenges and concerns over competition were the most prominent among North East respondents, and the more widely cited than in any other region or nation. And while input price inflation remained high, there were hopes it will fall sharply in the year ahead.
Despite the rising costs, North East profits grew at a faster rate than the 海角视频 average. Meanwhile, growing sales prices are expected to cool down in the next 12 months. And labour challenges were also said to be weighing on companies' sentiment, with the availability of non-management skills a growing problem for two-fifths of businesses, higher than elsewhere in the 海角视频. Staff turnover was cited as a problem for 34% of firms.