Administrations up 60% in North-west but remain below pre-pandemic levels

The number of businesses entering administration in the North-west in the first six months of 2022 rose 60% on the previous year’s figures, according to a study by Birmingham-headquartered law firm Shakespeare Martineau.

The firm’s national analysis found that 93 businesses in the region filed for administration from 1st January to 30th June 2022, out of over 620 nationwide: the third largest total of any UK region, behind London and the South-east.

However, administrations remain below their pre-pandemic volume; 940 businesses folded nationwide in the first half of 2019. Shakespeare Martineau have attributed the latest rise to the winding down of support schemes put in place during the Covid-19 pandemic. Andy Taylor, partner and head of restructuring at Shakespeare Martineau, explained:

“Administrations were suppressed during Covid due to the introduction of numerous measures, such as the Coronavirus Business Interruption Loan Scheme, the subsequent Recovery Loan Scheme and a general prohibition on many forms of enforcement.

“As those support packages have been removed, we have seen an increase in insolvencies generally, which is to be expected.”

The construction, manufacturing and retail sectors recorded the most administrations, 40% of all recorded by The Gazette Official Public Record, likely as they have been most affected by global supply chain challenges and inflationary pressure on businesses.

Andy Taylor added:

“Businesses are facing numerous headwinds – from inflation and interest rises to the challenging political landscape at home and further afield. There are a lot of businesses with endemic problems they have been sitting on for months and, in some cases, years. 

“If things continue as they are, we expect to see an increase in businesses failures as they attempt to address their underlying issues and battle tough trading conditions.

“We’re also anticipating the banks will review their portfolios and it may be they will be taking a more cautious approach to lending decisions in the short to medium term. We are also seeing more enforcement and less flexibility from HMRC. There is no doubt a rocky road ahead – with some commentators predicting a demand-led recession, which looks very different to what we experienced coming out of Covid.”