A steep fall in the number of businesses set up in the region over the past two months indicates local entrepreneurs are increasingly reluctant to ride out current economic challenges, including April’s rises in the National Minimum Wage and Employers National Insurance, as well as new US tariffs.
This is according to the Midlands branch of national insolvency and restructuring trade body R3 and is based on a monthly analysis of regional start-up data from business intelligence provider Creditsafe.
R3’s figures show there were 2,139 businesses set up in the East Midlands in May, which is a substantial 19.31% decrease compared to the 2,651 new businesses registered in March.
The May figure, however, is marginally higher than the 2,076 start-ups established twelve months previously in May 2024, which gives a longer-term indication of the state of the region’s economy, along with further R3 analysis showing that the number of companies with late payments on their books dipped in May.
R3 Midlands chair Stephen Rome, a partner at Penningtons Manches Cooper in the region, said: “The immediate decline in local entrepreneurship is reflected across the whole of the UK and highlights the uncertainty caused by rising employment costs, contracting economies, world politics and spiralling fuel and energy costs.
“It appears that many businesses are taking sound steps to minimise their current financial exposure and to push into new markets and ventures only at a time when they have the best economic platform to succeed.
“Meanwhile, for those directors who are worried about the viability of their business going forward, R3’s advice is to seek professional help and to do it as soon as possible. The sooner support is sought, the more opportunities there may be to assure a company’s survival and future success.”
