Sudden hit for local economy as West Midlands entrepreneurs opt to hold back – report

A steep fall in the number of businesses set up in the region last month indicates local entrepreneurs are increasingly reluctant to ride out current economic challenges, including the addition of an uncertain political landscape in the run-up to a July General Election.

This is according to the Midlands branch of national insolvency and restructuring trade body R3 and is based on a monthly analysis of regional start-up data from business intelligence provider Creditsafe.

R3’s figures show there were 4,951 businesses set up in the West Midlands in May, which is a substantial 41.73 per cent decrease compared to the 8,497 new businesses registered in April. The May figure is also 23.36 per cent lower than the 6,460 start-ups established twelve months previously in May 2023.

R3 Midlands chair Stephen Rome (pictured), a partner at Penningtons Manches Cooper in Birmingham, said: “The sudden and steep decline in entrepreneurship in the region is reflected across the whole of the UK and highlights the effect that continuing economic challenges and uncertainty have on entrepreneurs as they seek to minimise their exposure.

“The political uncertainty caused by the impending General Election, as well as longer term economic challenges, such as inflation, contracting economies and spiralling fuel, energy and wage costs, are all now taking effect.

“R3’s advice to any director worried about the viability of their business, start-up or otherwise, is to seek professional help and to do it as soon as possible. The sooner support is sought, the more opportunities there may be to assure a company’s survival and future success.”