Newly released data has highlighted a significant positive trend for businesses in Yorkshire and the Humber, with the region witnessing one of the most substantial declines in insolvency activity across the United Kingdom during the previous year. The latest Annual Business Health Report from R3, the professional trade body for restructuring, turnaround, and insolvency specialists, provides a comprehensive analysis of regional economic health, detailing insolvency and start-up figures while identifying sectors facing considerable financial strain.
Insolvency Activity Shows Promising Decline
Supported by robust data from CreditSafe, the R3 report indicates that insolvency activity—encompassing administrations, voluntary liquidations, and compulsory liquidations—decreased by an impressive 9.9% across Yorkshire and the Humber throughout 2025. This notable reduction represents the second highest fall recorded anywhere in the UK, surpassed only by Greater London, which experienced an 11% drop. The North East of England followed closely with a 9.3% decrease, illustrating a broader regional pattern of improved business resilience.
In stark contrast, other areas of the UK faced considerable challenges, with Northern Ireland and Wales seeing substantial jumps in insolvency activity of 20.2% and 11.7% respectively. These figures underscore the varied economic landscapes across the nation, with Yorkshire and the Humber emerging as a relative bright spot in terms of corporate stability.
Start-Up Figures Present a Mixed Picture
While the decline in insolvency activity offers encouraging news, the region's performance regarding new business formations was less favourable. New start-ups in Yorkshire fell by 8.4% in 2025, with 49,605 new businesses registered during the year. This downturn in entrepreneurial activity was exceeded only by Northern Ireland, which witnessed a dramatic 35.3% reduction, bringing its new business registrations down to 10,781.
The overall UK picture suggests a fragile operating environment for many local enterprises, with economic headwinds continuing to impact both established companies and new ventures alike. This dual trend of falling insolvencies alongside declining start-ups highlights the complex and challenging economic conditions facing businesses across the region.
Sector Analysis Reveals Persistent Pressures
The construction sector continued to account for the highest number of insolvency activities nationally in 2025, with 4,584 cases recorded despite a modest 6% reduction compared to the previous year. Companies within this industry have been exposed to a perfect storm of rising material costs, persistent delays in payments, acute skills shortages, and weakened investor confidence, creating a highly challenging operational landscape.
Notable construction sector casualties from the region included Kingston Modular Systems in Hull, which collapsed in September with the loss of 62 jobs, and Sheffield-based National Timber Group, which entered administration in September though parts of the business were subsequently rescued. Additionally, Hull construction specialist Tucker Mechanical and Electrical Building Services ceased operations in October after more than five decades of trading, illustrating the severe pressures facing even long-established firms.
Retail and Manufacturing Face Continued Challenges
The wholesale and retail sector recorded 4,124 insolvency cases nationally, while accommodation and food services saw 3,831 cases, both reflecting increased financial distress. These industries have struggled with squeezed profit margins as households rein in discretionary spending and businesses find it difficult to either absorb or pass on higher operational costs to consumers.
Manufacturing insolvencies also remained historically elevated with 2,188 cases across the UK, as companies contended with persistently high energy costs, ongoing supply chain disruptions, and subdued export demand in key international markets. These sector-specific challenges demonstrate that while overall insolvency numbers have improved in Yorkshire, significant structural pressures continue to affect multiple industries.
Expert Commentary on Regional Business Health
Dave Broadbent, chair of R3 in Yorkshire and partner at BTG, provided valuable insight into the regional economic landscape, stating: "Despite the encouraging drop in insolvency activity locally, the R3 report clearly shows that businesses, both regionally and nationally, are struggling to regain their footing in 2025 after several years of sustained economic challenges. While inflation has now eased from previous peaks, the cumulative impact of higher costs, tighter credit conditions, and weak consumer demand continues to place significant pressure on local companies, particularly smaller and mid-sized firms with limited financial headroom."
He further emphasised the importance of proactive financial management, adding: "As we move into 2026, with cashflow and profit margins remaining under considerable pressure, seeking professional advice at an early stage from an R3 member can make a critical difference. This approach gives viable businesses the very best chance of not only surviving but ultimately recovering and thriving in what remains a challenging economic climate."
