Concern that more businesses will fail

The number of businesses failing in the region could be set for further rises after an “alarming” increase at the end of last year.

Research by regional business rescue and insolvency firm McTear Williams & Wood (MWW) showed there were 94 company insolvencies in East Anglia in the last quarter of 2010 – up from 65 the previous quarter and 58 at the end of 2009.

The rise – the second in consecutive quarters – came against a national drop in insolvencies, down 3pc quarter-on-quarter, and 18pc over the year.

Norfolk saw the steepest increase, up from 14 at the end of 2009 to 36 in the quarter to December 31, 2010 – a 157pc increase.

A statement from MWW said: “The increase in corporate insolvencies across East Anglia for the second quarter in a row, against the national trend is alarming. “A possible explanation for this is the bias towards the construction and service industries in the region that appear to be more vulnerable.”

It added: “In our last quarterly update we suggested the corporate insolvencies in East Anglia may have reached a turning point following five successive quarters of improvement. The current quarter result supports that view.”

“The insolvency profession has been surprised by the low number of corporate failures over the last few quarters given the tough economic climate and this increase locally sets a trend which may see higher numbers of failures to come.”

Last week the Bank of England slightly downgraded its forecasts for economic growth during 2011 and 2012, following a 0.5pc decline in GDP during the final quarter of 2010.

But the office for National Statistics reported a bumper tax haul in January, with public sector net borrowing, excluding financial interventions by the government, showing a surplus of £3.7bn, compared to a £1.3bn deficit last year.

MWW warned that recent announcements about reduced GDP, public sector cuts, the weakening housing market and the VAT increase were “likely to translate into a further increase in corporate failures in the current quarter”, with bad debts set to post a “greater risk”.

The company added: “To guard against this directors should watch out for the warning signs – late or round sum payments, new unexpected credit applications and a lack of communication from customers – and if in doubt put cash flow before profit.”

24 February 2011
Eastern Daily Press

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