Number of northern firms falling into administration outpaced England and Wales

The number of companies falling into administration across the North outpaced the rest of England and Wales between January and March.

Fragile consumer confidence, rising costs and ongoing political and economic uncertainty conspired to increase the pressure on a number of sectors.

Analysis by KPMG of notices in the London Gazette showed the region saw the greatest number of insolvencies, with 113 administrations over the quarter. This compares with London, whose tally stood at 111 for the quarter. Elsewhere the Midlands saw 56 insolvencies and the South saw 53.

Combined, the number of UK  companies entering administration jumped from 279 in the final quarter of 2017 to 345 in Q1 2018 – an increase of 66, and the largest quarter-on-quarter increase seen in a number of years. However, the tally was only a modest increase on the same period last year, which saw 327 insolvencies – indicative that Q1 is traditionally the busiest period of the year for insolvencies.

Howard Smith, associate partner at KPMG in Leeds, said: “With the first quarter of the year dominated by a number of high profile insolvencies, you would perhaps be forgiven for thinking that the economic winds had changed and that business failures were suddenly rife after years of relative stability. However, when put in the context of only a modest increase on the same period last year, it’s clear that we’re still operating in a relatively stable market. It’s certainly not all doom and gloom out there!

“What has been notable is that many of the corporate failures that we have witnessed in recent months have taken place in consumer-facing industries – whether that be retailers, both traditional and online, or companies spanning the full breadth of the food and drink sector, from food manufacturing to wholesale, and retail to casual dining.

Smith said that the reality was that companies in these sectors must evolve – and quickly – due to cost increases and changes in consumer spending habits due to pressures on household incomes squeezed by inflation and relatively stagnant wages.

Smith added: “More broadly, general manufacturing, building and construction and logistics businesses also came under pressure over the quarter. However, the picture across many other sectors remained relatively static, ticking along at the historically low levels that have become the norm in recent years. It’s therefore perhaps too soon to call whether the activity seen during the first quarter is the start of more troubled times ahead.”