East Midlands businesses face a tough road ahead if they are to meet Britain’s 0.8% economic growth forecast for 2024, cited by Chancellor Jeremy Hunt this month (6/3/24) and based on latest projections from the Office for Budget Responsibility (OBR).
Although the forecast is higher than the 0.7% highlighted in the OBR’s previous outlook, published last November, new research from the Midlands branch of the UK’s insolvency and restructuring body R3 indicates the extent of the struggle facing the region’s companies as they attempt to fight back from a pandemic and a 2023 slump into recession.
Based on an analysis of data from business intelligence provider Creditsafe, the R3 Midlands figures show that East Midlands insolvency-related activity – which includes liquidator and administrator appointments as well as creditors’ meetings – increased by 27.03% last month compared to January, and by 2.17% against 12 months previously in February 2023.
A further ‘red flag’ for the East Midlands economy is raised through a decrease in the number of start-up businesses in the region, which has fallen by 8.68% from 2,995 in January to 2,735 in February.
Additionally, the number of East Midlands companies with late payments on their books has continued to rise, from 23,194 in January to 23,307 last month.
R3 Midlands chair Stephen Rome, a partner at law firm Penningtons Manches Cooper in the region, said: “There are a number of forces hindering economic recovery, not just in the East Midlands, but throughout the UK.
“Some of them are due directly to the pandemic and the subsequent withdrawal of monetary support, but other factors include the war in Ukraine and a tightening of monetary policy to control inflation and the cost of borrowing.
“The uncertainty this is creating in the local business sector is significant, and it appears to be impacting on entrepreneurial prospects in the region as well as on the health of more established companies.
“It’s therefore vitally important for business owners to be cautious and keep a very careful eye on cashflow as the economy continues to challenge. If difficulties arise, it’s crucial to take professional advice as soon as possible.
“There is much which can be done to support local business owners if they decide to seek help early enough.”
