A rise in the number of monthly company insolvencies in England and Wales does not reflect the seeds of recovery which are beginning to germinate in the Midlands business economy.
This is according to the Midlands branch of insolvency and restructuring body R3 and follows latest monthly statistics published by the Insolvency Service which show that corporate insolvencies increased by 1.5% in September 2024 to a total of 1,973 compared to August's total of 1,943 but decreased by 7.4% compared to September 2023's figure of 2,130.
R3 Midlands chair Stephen Rome, a partner at Penningtons Manches Cooper in Birmingham, said: “Although corporate insolvencies have risen by a small percentage compared to last month, there have been some positive indications for the local marketplace, with construction output increasing, retail sales volumes continuing to rise in August and consumers spending more in the hospitality sector in September.
“Across the wider local economy, however, the business climate remains difficult as almost every firm faces a multitude of issues, including ongoing cost challenges and uncertainty around announcements in the Budget.
“Of particular concern is the impact of future tax rises, and R3 members are telling us that there’s an increased demand for support around Member Voluntary Liquidations as directors take steps to reorganise their business and its finances ahead of any changes announced in the Budget.
“Also of significant concern are the potential knock-on effects of the conflict in the Middle East, particularly for local companies in the energy, manufacturing and retail sectors. Increasing instability could further disrupt trade routes, impacting on the supply of imports or exports. Businesses will have to weigh up whether they pass any cost increase onto customers or absorb it themselves.
“With so much uncertainty ahead, R3 urges Midlands businesses to keep a close eye on finances and seek advice at the first sign of significant distress. Most R3 members will give prospective clients a free initial consultation to learn more about their circumstances and to look at potential solutions.”
