The North East has witnessed a notable 20% reduction in insolvency rates in August compared to the same period last year, reaching a three-month low following a trend of increasing advisory support from restructuring specialists.
R3, the UK’s insolvency and restructuring trade body, disclosed that the number of insolvency-related activities recorded in the North East fell to 76 cases in August compared to 95 cases in the same month of the previous year. This decline marks the lowest level since May, which saw only 60 cases. The figures, sourced from data provided by Creditsafe, reflect a significant decrease amidst a backdrop of general economic uncertainty.
The drop in insolvency-related activities comes after two consecutive months of increases, with 89 cases recorded in June and 94 in July. Kelly Jordan, chair of R3 in the North East, attributed this reduction to a rise in businesses seeking professional restructuring advice at early signs of financial distress. She noted, ‘Of late, we’ve been seeing an increased demand for restructuring advice – more businesses seeking support when showing signs of distress or when their directors are worried about the business’s finances, instead of when they have become insolvent.’
The North East experienced the third-largest yearly fall in insolvency-related activity among UK regions, surpassed only by the South East, which saw a 25.8% decline, and Yorkshire and Humber, with a 21% fall. Despite this positive trend, Ms Jordan emphasised the continuing challenges faced by businesses in the region, including high costs, cash flow issues, and uncertain customer demand.
Ms Jordan urged business owners and directors to seek advice early, stating, ‘Despite the decline in insolvency-related activity, the market is still challenging, and many businesses in the North East are still worried about high costs, cash flow issues, and the uncertainty of customer demand. I would urge business owners and directors that are concerned about their financial position to seek advice as soon as they can from a qualified professional. Taking that first step can be hard, but by having the conversation early, you will have more time and more options available to you than if you’d waited for the problem to get worse.’
The observed decrease in insolvency rates in the North East underscores the importance of early intervention and advisory support in navigating financial difficulties. As economic pressures persist, the upcoming months will be crucial in determining whether this downward trend continues or if further support will be required.
