A steep rise in the monthly number of businesses set up in the East Midlands since the end of last year is coinciding with a substantial heightening of cashflow ‘red flags’, indicating that a ‘perfect economic storm’ could be brewing in the region.
This is according to the Midlands branch of national restructuring, turnaround and insolvency trade body R3 and is based on a monthly analysis of regional start-up data from business intelligence provider Creditsafe.
The R3 Midlands figures show that the monthly number of start-ups rose steeply by 40.23% in the East Midlands in July compared to last December, and by 10.67% against July last year.
At the same time, insolvency-related activity – which includes liquidator and administrator appointments as well as creditors’ meetings – has risen by 7.41% in the 12 months to July 2025. The number of local companies with late payments on their books remains high, with 25,607 East Midlands businesses recording unpaid invoices past their due date in July alone.
R3 Midlands chair Stephen Rome, a partner at law firm Penningtons Manches Cooper in the region, said: “While local entrepreneurs are becoming increasingly confident in riding out current economic challenges – which include higher employment costs, cautious consumer spending and growing global uncertainty – insolvency-related activity has risen and late payments remain a significant issue.
“If we are to avoid the destructive effects of any economic ‘perfect storm’, it is essential for entrepreneurs to be extra-vigilant, keeping a sharp eye on costs and cushioning cash flow where possible. Business owners should also not back away from taking professional advice as soon as it may be needed.
“Conversations about finances are not always the easiest ones to have, but there is a significant amount which can be done to rescue and support local companies if help is taken early enough.”
