North West administrations reached a post-Covid high in first quarter
Administrations have increased in the North West in the first quarter, reaching their highest since the start of the Covid-19 pandemic.
New figures from insolvency specialist, Interpath Advisory, show the stresses facing the region’s businesses are taking their toll.
Analysis of notices in The Gazette revealed there were 70 administrations across the region in Q1 2024, a further rise on last year’s corresponding figures (Q1 2023: 60) as the number of companies filing for the process continued its upward trend and surpassed the pre-pandemic level of 63 in Q1 2020.
The figures show a faster increase than the national figures, which saw a modest rise from 321 (Q1 2023) to 328 (Q1 2024). The North West accounted for more than a fifth (21%) of administrations in Great Britain, up from a share of 18.7% last year.
The most impacted sectors in the North West were Business Services with 12 cases, Industrial Manufacturing (10 cases) and Professional Services with nine cases.
Rick Harrison, Managing Director and Head of Interpath in the North West, said: “There has been a sustained upward pressure on insolvencies across the North West and wider UK economy in the last 12 months as government support has reduced and businesses have been buffeted by continued inflation, a cautious consumer, and high interest rates.
“The challenges that such punishing trading conditions have on company finances has been unsustainable for many and we’re seeing that come through in the rising number of administrations. The rate of failures in the North West is running at a greater pace than the national figures, reflecting the prominence of manufacturing and businesses services here – two sectors that have suffered from the economic volatility of late.”
He added: “From what we’re seeing on the ground, cashflow pressure is ultimately proving to be the tipping point. Rising costs have impacted margins, higher interest rates have impacted debt serviceability and many management teams have also found it difficult to generate the additional revenues required to give them sufficient breathing room.
“Looking ahead, we expect that the administration rate on an annual basis will continue to rise and to surpass the level we saw immediately before Covid-19 in 2020.
“That point of inflexion is likely to come towards the end of this year and will represent an important marker in the re-adjustment of the UK economy. Let’s not forgot that, while administrations can signal distress, the outcome of these processes is equally vital when looking at job and value preservation.”
