Investors help secure Cambridge's recovery

Cambridge continues to buck the trend when it comes to firms going bust.

The latest findings from McTear, Williams & Wood, the insolvencies practitioners who look at the Cambridge situation exclusively for the News each quarter, show just nine firms throwing in the towel in the last three months.

This is two fewer than during the first quarter and sees Cambridge continuing as an exception to the rest of the region and the country as a whole.

Chris McKay, of MWW, said: "In Cambridge it's all about the availability of funding from venture groups and other investors, while the rest of the region depends on consumer confidence."

The firm is predicting that elsewhere the number of insolvencies will continue to rise well into next year, but at a slower rate that during this year: "Next year won't be much better than this," McKay said.

"Most commentators don't expect to see solid growth in GDP until the end of 2010," the report states.

"Corporate insolvencies tend to lag economic performance by over a year, so we expect to see higher failures in 2010 and beyond.

But what might cause this?

“Companies which have survived have mostly done so by cutting cost and stretching creditors, leaving management exhausted and cashflow under pressure.

"Without a sharp recovery in the economy many businesses will simply not have enough momentum to see the recession through.

"In particular, since November 2008 nationally, 177,000 businesses have deferred VAT and PAYE/NIC payments and almost £1.2bn remains overdue. Without this lifeline many companies would have already gone to the wall and there is mounting evidence of a frosty attitude towards repeat requests for further deferrals from tax officials."

Voluntary bankruptcies have risen by 20% to 856 in East Anglia, according to the latest Ministry of Justice statistics, with the total, including Individual Voluntary Arrangements and Debt Relief Orders 27.52% higher than the same time last year at 1,516.

Nationally, the figure is 16,265, up 18%, with IVAs up 27% to 12,225. Personal insolvencies in 2009 are expected to top 140,000 by the end of the year.

Cambridge News

18 August 2009