A new study has revealed the UK regions where businesses are suffering the most against rising costs and economic uncertainty.
Soaring material costs, rising energy bills and hiked taxes have put increasing pressure on businesses, with some reaching breaking point.
The hospitality and retail sector in particular have borne the brunt of reduced consumer spend and increased operational costs. In September, The British Retail Consortium (BRC) urged the Chancellor to use the Budget to deliver changes, otherwise, the high streets will be subject to a fresh wave of store closures and thousands of job losses.
Now, research conducted by litigation firm Helix Law identified which UK regions are being hit the hardest by business insolvencies.
The methodology accounts for insolvency rates per 10,000 businesses, survival rates over five years, and growth trends since 2022.
North West
The North West emerged as Britain’s insolvency hotspot with an estimated 4,034 company failures in 2024.
It has an insolvency rate of 151.57 per 10,000 businesses.
“The North West combines high business density with some of the country’s worst survival rates,” explained Alex Cook, the commercial and complex property litigation partner at Helix Law.
“At just 36.10 per cent over five years, companies there are struggling more than almost anywhere else to establish themselves long-term.”
According to the report, the region’s 23.35 per cent growth in insolvencies since 2022 reflects mounting pressure on businesses across Greater Manchester, Liverpool, and Lancashire.
Traditional manufacturing areas are being hit particularly hard as global supply chain costs spiral.
Yorkshire and the Humber
Yorkshire and the Humber recorded the UK’s highest insolvency rate at 165.07 per 10,000 businesses, with 3,139 estimated failures in total.
The region had a 35.22 per cent surge in insolvencies since 2022 – the steepest climb in the top three regions.
“This dramatic spike suggests Yorkshire businesses are facing a sudden shock rather than a gradual decline,” Cook said. “The region’s five-year survival rate of 41.04 per cent is actually better than the North West, but something has clearly shifted in the last two years.”
Cities like Leeds, Sheffield, and Hull are seeing established businesses buckle under pressure, particularly in sectors dependent on consumer spending and commercial property.
West Midlands
The West Midlands rounds out the top three with 2,377 estimated insolvencies and a 72.70 impact score.
Its insolvency rate of 109.98 per 10,000 businesses may be lower than its northern counterparts, but the region faces a different challenge, says the report.
“The West Midlands has the worst five-year survival rate in our top ten at just 34.66 per cent,” says Cook. “This suggests structural problems that go beyond the current economic squeeze. Businesses there have been struggling to establish themselves for years.”
Birmingham and Coventry’s automotive supply chains are feeling the pinch from both domestic cost pressures and international competition, contributing to the region’s 23.20 per cent growth in insolvencies since 2022.
London and the South East
London and the South East had an estimated 5,459 company insolvencies and was also the region with the highest insolvency growth rate at 24.43 per cent.
The report cites: “As a global financial centre the perception is that London and the South East of England are somewhat immune to the impact of financial pressures.
“This isn’t borne out by the data, showing over 5459 company failures in 2024, over 20 per cent higher than the nearest region in second place; the North West.
“The number of companies in London and the South East perhaps makes it no surprise that there are a corresponding high number of corporate offices in the region also,” explained Cook.
“Notwithstanding this, any perception that the South doesn’t face the same pressures is clearly wrong. We act in many commercial disputes in the Business and Property Court at the High Court in London and see first hand the volumes of cases; disputes and litigation taking place”.
Commenting on the findings as a whole, Cook concluded: “With growth more challenging in the South East post-pandemic we saw investment flowing North, following promises of greater yields and return on investment. Many of these investments ended in litigation in one form or another, when either returns did not materialise as promised, or something else went wrong.
“Closures indicated in this data go beyond just one factor. Aside from misselling cases, interest rates have made borrowing expensive just when companies need cash flow support.
“Inflation has pushed the cost of everything up, from wages to materials, while energy costs remain stubbornly high. Add increased corporation tax and business rates, and you have a toxic mix that’s proving fatal for thousands of companies.”
