Figures revealed by a UK credit check specialist have revealed that Northern Ireland has seen the biggest rise in business insolvencies in the past three years since the EU Referendum in June 2019 with the number of failing businesses in the area increasing by 114.3% on an annual basis.
The stats from Creditsafe provide an indicator of which regions are suffering, or indeed benefitting at a time where economic uncertainty is at a high.
With Jamie Oliver’s restaurant group and British Steel the latest companies to go into administration, Creditsafe’s UK Insolvency Index has revealed which regions of the UK have experienced the largest spikes in company insolvencies with Greater London (up 103%) and Yorkshire and Humberside (82.4%) making up the rest of the top three.
Insolvency relates to the point where a business can no longer meet the financial obligations to its creditors and where business might be forced to liquidate its assets to pay off any outstanding debts.
The rate of insolvencies has increased universally across the UK over the past three years, with Brexit negotiations, uncertainty in the marketplace and delayed decision making by business leaders regularly being cited as the factors responsible for the demise of many established companies including Carillion and Debenhams.
Comparing the total number of insolvencies in each region from in 2016/17 and 2018/19, the percentage increases were as follows:
· Northern Ireland – 114.3%
· Greater London – 103%
· Yorkshire and Humberside – 82.4%
· North East – 77.4%
· South West – 72.5%
· Wales – 66.7%
· East Anglia – 62.6%
· North West – 56.7%
· South East – 50.9%
· Scotland – 39.4%
· East Midlands – 34.4%
· West Midlands – 10.3%
Cato Syversen, CEO at Creditsafe, thinks the recent announcement could have repercussions for smaller suppliers.
He said, “In the past few years we have seen many big name brands suffer on the high street and the industries we are seeing hit the hardest are retail, food and construction.
“As well as the economic challenges surrounding Brexit, we are seeing more consumers choosing to shop and eat local to support smaller independent businesses and this is noticeably eating into the already fine margins of major restaurant groups.
“The closure of a widespread chain such as Jamie’s Italian will inevitably impact those who own commercial rental property where these sites are based so it’s crucial that businesses have a contingency plan in place to account for sudden closures wherever possible.”
Based on the figures, the regions that were least affected in terms of company insolvencies were the West Midlands (up 10.3%), the East Midlands and Scotland.