The number of Yorkshire businesses going bust jumped by 20% last month, as more firms feel the impact of inflation.

Yorkshire and the Humber saw a worsening economic picture in June as businesses struggled in the face of falling consumer spending, leading to the region seeing levels of insolvency-related activity increasing by a fifth compared with May 2023.

According to the latest research from insolvency and restructuring trade body R3, Yorkshire was one of four regions and nations across the º£½ÇÊÓƵ which saw a month-on-month rise in insolvency-related activity, which includes liquidator and administrator appointments and creditors’ meetings.

Read more: The Prospero Group on the move into prime Leeds office complex

The research, based on an analysis of data provided by CreditSafe, showed 274 insolvency activities, the largest number in 16 months since its peak of 601 in March 2022, and March 2023 when it reached 283.

Looking at the number of start-ups in June – another indicator of economic health – there was a decrease in levels of new businesses since the previous month in all parts of the º£½ÇÊÓƵ with Yorkshire and the Humber seeing the greatest fall. The region saw start-ups decrease from 4,782 in May to 4,182 in June, a drop of 12.5%.

Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, said: “We are now starting to see the negative impact of rises in the cost of living and escalating interest rates as businesses feel the bite of households’ reduced disposable income. Unfortunately, With the squeeze on consumer spending looking set to continue, the prospect of the º£½ÇÊÓƵ sliding into recession is a very real risk.

“While Yorkshire has a strong track record of performing relatively strongly despite adverse economic conditions, there’s no doubt that there are some major challenges ahead as food inflation continues, mortgage rates edge upwards and energy prices are predicted to remain high next winter. With more financial pain likely, directors would be well advised to keep a close eye on cash flow and turn to professionals for advice at the first signs of trouble when the most tools will be available to prevent problems from escalating.â€