Boom preceding bust? Perfect storm forecast by R3

Based on an analysis of data from business intelligence provider Creditsafe, the R3 Eastern figures show that the number of startups rose steeply by 45.05 per cent in East Anglia in January, from 6,524 in December to 9,463. Year-on-year, the January figure highlights a rise of 26.14 per cent compared to January 2023, when startups numbered 7,502.

Here comes the ‘but.’ The R3 analysis also shows that levels of debts owed by East Anglian businesses in liquidation in the region increased by 60.71 per cent last month and by almost a third in comparison with January of last year. The number of local companies with late payments on their books has also begun to rise for the first time in recent months.

R3 Eastern Chair Hayley Watson, associate director at East Anglian business rescue and insolvency practice McTear Williams & Wood, said: “Significant increases in the number of local businesses, along with substantial rises in late payments and monies owed by firms in liquidation could create a perfect economic storm if the region’s new entrepreneurs fail to cushion cashflow and keep the sharpest eye on costs.

“We are facing extremely challenging times in our local economy, with very tricky trading conditions across all sectors, but they can be navigable if entrepreneurs are duly cautious and don’t back away from taking professional advice when needed.

“Patience may also be a virtue as new economic forecasts see a fall in inflation this spring, enabling the Bank of England to cut interest rates towards the middle of the year. If this happens, it will give companies far more stability and certainty to plan ahead and invest in their operations.

“In the meantime, should significant cash flow difficulties arise, it’s crucial for business owners to take professional advice as soon as possible. There is a significant amount which can be done to rescue and support local companies if help is taken early enough.”