A report laying bare the strong tide of insolvencies in UK coastal locations should serve as a wake-up call for regions heavily reliant upon tourism, according to one insolvency expert.
The Insolvency Service’s report on individual insolvencies revealed that of the ten local authorities with the highest rate of insolvencies, six were in coastal areas including Scarborough, Torbay, Plymouth, Hull, Blackpool and Stockton-on-Tees.
The report has shown a nationwide increase in the insolvency rate for the third successive year and Bai Cham, Partner at CVR Global, believes major financial surgery is needed on the coast.
“Individual insolvencies can happen for all sorts of reasons – such as relationship breakdowns, illness or lack of money management – but the rates of insolvency often paint a picture of the health of local economies – and tourism is one of those sectors that can often suffer,” said Bai.
“In turn regions that rely on tourism can be the hardest hit – when the sun is shining business is booming – but what happens in these locations during the other half of the year?
“Devon and Cornwall – two of the UK’s most desirable holiday destinations and with a rich farming community – had just shy of 30 people per 10,000 adults entering into insolvency.
“This is the second highest rate behind the North East and is brought about by an economy that suffers during off-peak seasons, coupled with a lack of investment driven by Brexit uncertainty.
“The demise of coastal towns is rife though and has been ever since the rise of overseas package holidays – this is a problem that has been a long time coming for tourism businesses on our coastlines, and this is filtering down into consumer insolvencies as seen in this report.
“Attracting inward investment into towns and cities is of course easier said than done, but it is exactly what is required in order to restore coastal economies – and communities – back to the booming age of the mid-to-late 20th century.
“Margate is a success story where investment in a major attraction has allowed other businesses to flourish. The town was typical of many seaside resorts throughout the UK and had suffered from a lack of investment for many years, but since the opening of Turner Contemporary art gallery, there is a new optimism that the town can re-establish itself and thrive once more.
“Off the back of this report there will be a lot of concerned businesses in coastal areas worried about becoming another insolvency statistic, and I would recommend they seek advice from an insolvency expert now.
“If there is any doubt in your mind about your business’s long-term viability then an insolvency practitioner can help you to plan ahead – they aren’t just there to clean up financial turmoil, they are also there to prevent it.”