There is cause for optimism around the North East despite new figures showing company insolvencies at a level not seen since the 2008 recession, a North East expert has said.
On the back of Government statistics, which show an 18% rise in insolvencies in April compared with March and the same rise on April 2023, North East chair of insolvency trade body R3, Kelly Jordan, said the recession in the final part of last year had contributed to the rise in company failures. Data from the Insolvency Service shows 2,177 firms were subject to insolvency action including administrations, compulsory liquidations, creditors’ voluntary liquidations, and company voluntary arrangements.
But growth in the 海角视频 economy and a rise in the number of new company registrations is offering hope for the region. The figures come as the International Monetary Fund has predicted that the 海角视频 economy will grows faster than previously expected.
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Ms Jordan said: “The last year and the last quarter have seen corporate insolvency numbers reach a level not seen since the previous recession in 2008-09. The fact the 海角视频 had entered a recession (albeit relatively modest) during the last two quarters of 2023 was a contributing factor, however the recession would appear to have been short lived with a better than expected growth in GDP of 0.6% between January and March which has largely cancelled out the recession itself.
“Against this backdrop, inflation is falling and the Bank of England have held interest rates for a further month, with market speculation abundant as to whether and when a cut is on the cards. Corporate registrations are at a record high, so there are factors at play which suggest some return of business confidence, if not consumer confidence with cost-of-living pressures still playing their part. Working out what is going on is therefore becoming more nuanced than simply blaming the pandemic, cost of living, inflation and interest rates.
“The annual and monthly increases in corporate insolvencies shown in the figures published today have been driven by an increase in all types of corporate insolvency process, but the key areas which stand out are the increases in creditors’ voluntary liquidations most of which relate to small and medium sized companies – the process which has seen the largest rise (after a brief decline in March) – and administrations."
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She went on to say the rise in company voluntary liquidations could be down to directors calling time on businesses at the end of the financial year and in other cases could be due to distressed firms being unable access more complex and expensive forms of restructuring. Addressing the modest increase in administrations she suggested the trend indicated an increasing number of businesses that could potentially be rescued rather than wound-up as separate pointers provided a backdrop of increasing businesses confidence and economic recovery.
She added: "The sectoral data we have available shows that the construction, retail and hospitality sectors continue to experience the highest insolvencies this year so far. Retail and hospitality businesses have been especially affected by consumers’ wariness about spending money, poor weather in February and a tough pre-Christmas trading period. Issues with the weather will also have affected the construction industry, as will the fall in new work it has suffered from since the start of the year.
"Despite the difficult business climate over the period these figures cover, there is some cause for optimism. The economy is growing again and business and consumer confidence are both improving, and while businesses remain concerned about costs and consumer demand, the mood is generally more positive with a significant increase in new company registrations being reported by Companies House."