Region’s administrations fall but pressure remains on construction sector

The number of companies in Yorkshire and the North East of England filing for administration in the first quarter of the year dropped by more than a quarter (27.5%), according to figures from Interpath Advisory.

However, insolvency experts warn that stresses facing the region’s businesses remain, with building & construction particular affected. 

Analysis of notices in The Gazette by Interpath shows there were 37 administrations across Yorkshire and the North East in quarter one 2024, a drop against last year’s corresponding figures (Q1 2023: 51).

The figures buck the national trend as the number of cases in Great Britain saw a modest rise from 321 (Q1 2023) to 328 (Q1 2024). Yorkshire and the North East accounted for just over a tenth (11.3%) of administrations across the country.

Building & construction was the stand-out most impacted sector in the region with 11 cases in the first three months of the year, followed by industrial manufacturing with six administrations.

James Clark, managing director and head of the Yorkshire team at Interpath Advisory, said: “Yorkshire and the North East has had some relief as the number of administrations fell on a quarter-on-quarter basis compared to last year, but this risks masking a broader long-term trend of distress 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 come through in administrations.

“From what we’re seeing on the ground, cashflow pressure is ultimately proving to be the tipping point.

“Costs have hammered margins, but many management teams have also found it hard to find the revenues that will give them sufficient breathing room.

“A stubborn base rate and tight covenants with lenders combine to make the hard wall that they can then come up against. That distress can spread through supply chains and can impact larger businesses.

“Looking ahead, we expect the administration rate on an annual basis 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.”