McTear Williams & Wood

Region sees big increase in insolvencies

After six successive quarters of falling numbers of company failures in East Anglia, there has been a marked increase across the region, bucking the national trend.  The number of company failures in quarter three of 2010 in East Anglia was up 35pc on the previous quarter, compared to a drop of 6pc nationally.  A comparison of quarter three 2010 with the same period in 2009 shows company insolvencies rose 7pc in East Anglia compared to a fall of 20pc nationally.  McTear Williams & Woods' (MWW) business index for East Anglia now stands at 151 from the baseline of 100 in quarter three 2007.  The national comparative is 143. Having outperformed the UK in recent quarters, East Anglia is now behind the rest of the country but with wide variations by county.

• Norfolk saw an increase of 133pc quarter on quarter in company failures and now has an index of 191.  However the picture is exaggerated by two groups of companies and if counted as two rather than the seven individual companies, the increase would be a more modest 7pc.
• Cambridgeshire with an index of 68 continues to outperform the national and county indexes by a large margin but even here there has been a 30pc increase quarter on quarter.
• Suffolk and North Essex has also seen an increase of 7pc quarter on quarter and its index now stands at 238.

Having been flattered by an exceptionally low number of company failures in quarter two, to some extent East Anglia has simply come into line with and slightly exceeded the national trend.  The increase in the MWW business index after successive falls since quarter one 2009 may be the turning point leading to the increase in corporate insolvencies that most of the insolvency profession has been predicting for some time.  However, we still believe that the number of company failures will remain low, unless the economic recovery falters.  This said we are seeing early signs of fall-out from the public-sector cuts and this and the recent weakness in the housing market is bound to introduce a new dimension.

With so many uncertainties it would be foolhardy to assume that the risk of business failure is receding and business managers should remain vigilant by keeping cashflow forecasts updated, being ready to cut costs if necessary and keeping a cash cushion.

Number of insolvency companies

Data: All corporate insolvencies except compulsory liquidations as advertised in Stubbs Gazette and the public notices in the principal newspapers.