Member Article

Yorkshire economy rallies with increasing number of start-ups and decreasing levels of distress

Despite reports of the UK economy remaining sluggish compared with pre-Covid growth, Yorkshire and the Humber appears to be continuing to put in a stalwart performance with the number of start-ups in the region once again rising and insolvency-related activity falling last month.

The latest research from R3, the UK’s insolvency and restructuring trade body, which is based on an analysis of data provided by CreditSafe, shows that the year started strongly in Yorkshire and the Humber with start-ups in January 2023 increasing by 34% since the previous month. The numbers continued to grow in February reaching a high of 5,315 in March. After decreasing in April, they rose to 4,782 in May, a month-on-month increase of 11.5%.

Last month, there was also a drop in levels of businesses in the region experiencing insolvency-related activity (which includes liquidator and administrator appointments and creditors’ meetings). Having increased month-on-month for three consecutive months from January to March 2023, it fell in April and then again in May. From the 2023 high of 283, it decreased last month to 227 (a fall of nearly 20%).

Looking across the UK, in May all 12 regions and nations saw the number of start-ups increase compared with the previous month. The largest increases were seen in Northern Ireland which rose by 24.8%; West Midlands (up by 23.7%); and East Anglia (up by 19.4%).

Another sign of economic confidence or distress, the level of insolvency-related activity, showed a more mixed picture. While eight of the regions and nations saw double-digit falls, there were increases in East Anglia (up by 15.2%), East Midlands (5.3%), Greater London (2.7%) and the North West (0.3%).

Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, said: “The ONS figures for the first quarter of the year showed that the UK had seen growth of 0.1%, although this was smaller than the economy pre-pandemic and puts the UK at the bottom of the G7 league. However, the growing number of new businesses launching in recent months, both here and across the UK, is certainly welcome news showing that many entrepreneurs see opportunities in the current environment.

“While it’s also encouraging that levels of insolvency-related activity also fell last month in much of the UK, with inflation remaining stubbornly high and households facing the challenge of increased mortgage costs, prospects for consumer-facing sectors, such as retail and hospitality, are still precarious given the squeeze on discretionary spending. There’s no doubt that many businesses are continuing to reel from the impact of Covid with bounce back loans now due for repayment and, in this challenging landscape, it is vital that directors seek professional advice as soon as financial difficulties become evident.”

This was posted in Bdaily's Members' News section by Emma Kilmurray .