Company bankruptcies rocket as recession bites

On National Stress Down Day, the last thing we needed was a massive jump in the insolvency rate...

by
Last Updated: 31 Aug 2010

Figures released by the Government’s Insolvency Service today show that 4,607 companies went into liquidation in the fourth quarter of 2008, a 51% jump on the previous year, while another 2,428 businesses became insolvent – a massive 220% rise from the 2007 figure. It’s a clear indication of how tough life has become for British businesses in the last few months, as the problems in the financial sector have hit the real economy with a bang. The Samaritans have designated this as their annual National Stress Down Day – at this rate they might have their work cut out…

The number of liquidations last quarter (which include a 62% year-on-year jump in creditors' voluntary arrangements) mean that 1 in 150 active companies apparently went bust during 2008. The insolvency figures are equally alarming: that total includes 261 receiverships, 2,018 administrations and 149 company voluntary arrangements, all of which are noticeably higher than 2007. And the bad news is that nobody seems to be expecting an upturn any time soon. ‘2009 will go down as a bleak year in history for mid-market companies,’ says Baker Tilly restructuring partner Geoff Carton-Kelly. ‘Things will get worse for them before they get better’.

To complete an unwelcome triple whammy, the Insolvency Service also revealed today that individual insolvencies are up 19% year-on-year, with almost 30,000 people affected. In other words, it’s pretty grim news all around. Even yesterday’s interest rate cut seems to have done little to alleviate the gloom – many commentators think this latest cut could end up doing more than harm than good (although it has boosted the pound, which rose against the euro this morning).

So all in all, it’s perhaps no bad thing that today is National Stress Down Day, an annual Samaritans initiative to raise awareness of the effects of stress in the workplace. The idea of this laudable campaign is to encourage people who have professional or financial worries to seek support from the people around them – whether that means friends, family, colleagues or the Samaritans directly. Judging by these insolvency figures – and after a week in which the stresses of commuting have been accentuated by the bad weather – there’ll be no shortage of people in need of a helping hand…


In today's bulletin:
Company bankruptcies rocket as recession bites
BA losses soar - and more cuts loom
M&S tax victory takes the biscuit
MT's Week in 60 Seconds
Lessons in perseverance, from YouTube

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