R3 North East warns businesses owners to stay vigilant as corporate insolvency levels remain high
A fall in the monthly number of company insolvencies is an encouraging sign for North East businesses heading into 2026, but business owners should remain vigilant as annual figures are at historical highs.
This is according to the North East chair of R3, the UK’s trade body for restructuring, turnaround and insolvency professionals, and comes on the back of new statistics published by the government’s Insolvency Service, which show that corporate insolvencies in England and Wales decreased by 10% last month to 1,671 compared to the previous month, and by 13% against the December 2024 figure.
Annual statistics, however, show an increase of 0.2% in 2025 compared to 2024, rising to 23,938 from 23,880, and highlighting that record numbers of businesses continue to struggle in the current economic conditions.
Kelly Jordan, North East Chair of R3, and partner at Muckle LLP, said: “Corporate insolvencies in 2025 remained at historically high levels, with difficult trading conditions, high overheads and the impact of the national insurance rise weighing heavily on the local economy.
“Compulsory liquidation levels have increased to their highest annual number in 13 years as creditors take firmer action to recover debts to manage pressures in their own businesses.
"Furthermore, creditors’ voluntary liquidation numbers over the past four years are at their highest levels since records began in 1960.
“Although inflation has begun to ease and economic growth has picked up slightly, 2025 was a year in which many businesses were on fragile ground financially.
"Heading into 2026, the lasting effects of elevated costs, restricted access to finance and subdued customer demand continue to stretch cashflow, particularly for smaller and mid-sized firms.
“Construction continued to be the most distressed sector nationally last year, while major housebuilders are forecasting static growth and muted demand this year due to market uncertainty and rising building costs.
"Retail and hospitality remained the second and third most distressed sectors.
“With economic pressures likely to remain high for local businesses in 2026, seeking professional advice from R3 members gives struggling companies more options, more time and a far greater chance of stabilising finances before problems become unmanageable.”