Business insolvencies 'on the increase'

News Article - 22 May 2012
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Company insolvencies are on the rise, a recent study by the Insolvency Service has shown.

Last quarter, the number of business liquidations stood at 3,194 in England and Wales, 1,411 of which were compulsory bankruptcies.

The figures marked a 4.9 per cent increase in the number of compulsory liquidations compared with the previous quarter and a rise of 9.7 per cent on the same period during 2005.

Mike Jervis, a partner in PricewaterhouseCoopers' business recovery practice, said that the statistics were "a clear warning sign for the economy".

Among the factors contributing to insolvencies were rises in the interest rate and increasing costs; however he stated that these were not usually the main factors forcing businesses into liquidation.

"In our experience, most of the companies that have gone into insolvency have done so owing to difficulties in dealing with competitive pressures and defining where they sit in the market for their goods and services," he said.

Responding to the figures, shadow chancellor George Osborne, said: "Rising insolvencies are just the latest symptom of an economy built on debt and Gordon Brown is to blame."

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