Number of South West insolvencies hits record high
The number of companies in the South West of England filing for administration has reached the highest level for first quarter since the start of the COVID-19 pandemic.
The data comes from Interpath Advisory and highlights the stresses facing the region’s businesses.
Analysis of notices in The Gazette by Interpath shows there were 34 administrations across the South West in the first quarter a further rise on last year’s corresponding figures (Q1 2023: 30) as the number of companies filing for the process continued its upward trend and towards the pre-pandemic level of 46 cases in the first quarter of 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 South West accounted for more than one in ten (10.4%) of administrations in the UK in the first three month of the year, up from a share of 9.3% last year.
The most impacted sectors in the South West were business services and industrial manufacturing each with six cases, and building and construction with five administrations.
Lee Swinerd, head of Interpath Advisory’s Bristol team, said: “There has been a sustained upward pressure on insolvencies across the South West and wider UK economy in recent years as Government support has fallen away and businesses have been buffeted by inflation, poor growth, a cautious consumer, and high interest rates.
“The wear and tear that such punishing trading conditions have on company finances is unsustainable for many and we’re seeing that businesses are coming to the end of the road, with no more options available and having to go into administration.
“From what we’re seeing on the ground, cashflow pressure is ultimately proving to be the tipping point. Costs have hit margins, with management teams finding it increasingly difficult to pass through continued increasing costs to customers. The patience of some stakeholders has worn thin with sources of new funds limited or non-existent. That distress can spread through supply chains and can impact larger businesses.
“Looking ahead, we expect that the administration rate on an annual basis will continue to rise and to surpass the peak 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 and the other side of the equation. Some businesses will be attractive to potential purchasers but others will not survive, taking over capacity out of the market. That’s why it is so essential that businesses seek support as early as possible as it can give them the best chance of a positive outcome.”
