The number of start-ups in Wales soared in the first quarter of 2022, but insolvency-related activities are also on the rise, R3 has said.
New research from the insolvency and restructuring trade body has found that more than 4,300 new Welsh firms were started in Q1 this year – with almost half registering in March alone.
Figures, based on data from online company credit score provider Creditsafe, revealed that the number of start-ups rose from 372 businesses in January to 2,116 in March this year – an increase of 469% and the biggest percentage change in any UK region or nation.
Wales also saw a 385% increase in newly established companies between December 2021 and March 2022 – the second highest rise in the UK behind the West Midlands.
However, R3 also reports that insolvency-related activity, including liquidator appointments, administrator appointments and creditors’ meetings, rose by 123% between March and February with an increase of almost 200% between March and January.
This still remains relatively low in Wales compared to the rest of the UK, said the trade body, with 266 insolvency-related activities in Wales in the first quarter of the year. This was the second lowest in the UK behind Northern Ireland at 44.
Charlotte May, R3 chair for Wales and associate director for South West and Wales, said she was delighted to see entrepreneurism in Wales continue to grow despite the financial impact of the pandemic.
She said: “The first three months of the year have seen a tidal wave of business activity and it’s inspiring to see new business owners taking the opportunity to respond to new opportunities and changing consumer demands.
“While the number of start-ups is encouraging, we are also seeing insolvency levels in Wales slowly increase too, which, given the current economic climate, is not surprising.
Ms May added: “Between increased creditor pressure, low consumer spending and rising inflation, this is the most difficult period for businesses since the height of the pandemic.
“Anyone thinking about setting up a new business should not be discouraged but should certainly be prepared for a challenging year. The first few months of trading are always tough and the current economic pressures will only amplify these struggles.”