The Midlands business economy is showing signs of recovery despite a rise in monthly company insolvencies.

This is according to the Midlands branch of insolvency and restructuring body, R3.

Its analysis follows the latest monthly statistics published by the Insolvency Service, which show a 1.5 per cent increase in corporate insolvencies in September 2024, compared to August.

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The total for September was 1,973, compared to 1,943 in August.

However, the number of insolvencies decreased by 7.4 per cent compared to September 2023's figure of 2,130.

R3 chairman Stephen Rome, who is a partner at Penningtons Manches Cooper, said: "Although corporate insolvencies have risen by a small percentage compared to last month, there have been some positive indications for the local marketplace, with construction output increasing, retail sales volumes continuing to rise in August and consumers spending more in the hospitality sector in September.

“Across the wider local economy, however, the business climate remains difficult as almost every firm faces a multitude of issues, including ongoing cost challenges and uncertainty around announcements in the Budget."

He added: "Of particular concern is the impact of future tax rises, and R3 members are telling us that there's an increased demand for support around Member Voluntary Liquidations as directors take steps to reorganise their business and its finances ahead of any changes announced in the Budget.

"Also of significant concern are the potential knock-on effects of the conflict in the Middle East, particularly for local companies in the energy, manufacturing, and retail sectors.

"With so much uncertainty ahead, R3 urges Midlands businesses to keep a close eye on finances and seek advice at the first sign of significant distress.

"Most R3 members will give prospective clients a free initial consultation to learn more about their circumstances and to look at potential solutions.”