North West businesses accounted for 17% of administrations in the first six months of 2024 – the second highest region in the UK – according to new research.
A total of 879 businesses, 148 of which came from the North West, filed for administration between 1 January and 30 June – marking a 16% increase compared to the same time period in 2023 and 42% rise in comparison to 2022.
Among the worst-hit sectors for the second year running were retail, manufacturing, construction, real estate and hospitality, accounting for 57% of all administrations.
Regionally, Greater London led the way with 22% of the filings, followed by the North West (17%) and Yorkshire & The Humber (11%), data from The Gazette Official Public Record and analysis from law firm Shakespeare Martineau revealed.
While administrations are still yet to hit pre-Covid levels (940 in the first six months of 2019), an insolvency and restructuring expert has warned that more businesses will fail unless the next government controls inflation and gets a grip on rising interest rates.
Andy Taylor, partner and head of restructuring at Shakespeare Martineau, (pictured) said: “The continued increase in the number of businesses filing for administration is indicative of the prolonged economic challenges that are plaguing the country.
“The data highlights the disproportionate impact on the retail, manufacturing, construction, real estate and hospitality industries in particular, which, together, constitute a substantial proportion of all administrations. Changing consumer buying habits means the retail and hospitality sectors are bearing the brunt, and there has also been a reduction in housebuilding, which has a knock-on effect in the construction and real estate sectors.
“The cost of money, marked by high interest rates throughout 2023, exacerbates financial strains on businesses with models that thrived in a sub-2% interest rate environment. Organisations can only bear that pressure for so long before its sustained impact starts to wash through and they begin running out of cash.
“Moreover, HMRC continues to be more active, with threatened enforcement pushing businesses towards considering their options, and many opting for administration as an alternative to being wound up on a compulsory basis.”
The retail industry was the worst-hit sector for the second year running, accounting for 14% of all administrations in the first six months of 2024.
Andy added: “Consumer spending is shrinking and footfall on the high street and in restaurants is declining as a result. The pressure is also on businesses as they face higher borrowing costs and energy expenses, so they are being squeezed from both sides.
“Our advice remains consistent – seeking professional advice early can open up more options for struggling businesses. It is crucial not to ignore the signs and bury your head on the sand, and, instead, take a proactive approach to address underlying issues. By doing so, businesses can better navigate the tough trading conditions and increase their chances of survival.”
