A sharp increase in demand for insolvency advice, as well as a steep fall in the number of new businesses in the region, is indicating a further toughening of the local economy.
This is according to the Midlands branch of national insolvency and restructuring trade body R3 and is based on an analysis of data from business intelligence provider Creditsafe.
R3’s figures show that East Midlands insolvency-related activity – which includes liquidator and administrator appointments as well as creditors’ meetings – increased sharply last month by 78.85% in comparison with January’s activity.
At the same time, the number of new businesses set up in the region fell by almost a fifth (18.32%) in February compared to February 2024, dropping from 2,735 to 2,234.
The R3 analysis also shows that the number of East Midlands businesses in liquidation which owe money to their creditors increased by 9.40% last month against January’s figures, and the number of companies with overdue invoices on their books remained high at 24,308.
R3 Midlands Chair Stephen Rome, a partner at Penningtons Manches Cooper in the region, said: “It appears that international trade uncertainty is now impacting heavily at a local level, giving rise to weak business confidence and a slowing of entrepreneurial investment.
“There will be further pressure on local businesses when the increase in employer national insurance contributions comes into force next month, which may drive firms to pass on rising costs to consumers.
“As for what lies ahead over the longer term, there could be a silver lining with the additional government spending announced in the last Budget, which comes into effect from April onwards.
“In the meantime, R3 would urge any local businesses struggling financially to seek advice as soon as possible. Most R3 members offer a free initial consultation to explore potential solutions for any significant financial issues.”
