PwC business finance survey shows mixed results
PwC have released new figures showing a fall in corporate insolvencies over the past year – but businesses are even worse off than this time last year.
In total 3,531 companies became insolvent in the second quarter of 2011 compared to 4,216 in the previous quarter. However, the level of insolvencies increased by 2% compared to the second quarter of 2010.
This trend is unusual in a recession, but low interest rates, increased time to pay agreements by HRMC and support from lenders have helped many businesses.
Sean Hamilton, Director at PwC North East commented: “The declining levels of corporate failure this year should not lead to complacency as our data shows that the overall picture is worse than this time last year.
“The UK economy is by no means out of the woods yet as we continue to see retailers running into financial difficulties and shutting up shop.
Several sectors, especially retail and hospitality and leisure suffered particularly, seeing 9% and 10% increases respectively. The construction industry also saw 584 companies entering insolvency this quarter.
Sean added: “The impact of the Government’s public sector spending cuts, which have yet to be felt, are likely to have a further adverse effect on consumer spending and especially on those companies supplying the public sector.”
Unexpectedly, the manufacturing industry is performing very well, with 27% less insolvencies that the first quarter of 2010.