Surge in Norfolk companies going under
The number of Norfolk companies falling victim to the recession has soared this year, despite some signs the economy could be starting to recover.
Research by law firm McTear Williams & Wood, which has an office in Norwich, showed 40 firms were declared insolvent in Norfolk in the first three months of the year - up 43pc from the last quarter of 2008.
The figure is also more than double the 18 insolvencies in the first quarter of 2008, showing the credit crunch has hit the county hard in spite of some positive signs such as an increase in property sales.
The 43pc increase is far steeper than the national rise of 8pc, and bosses at McTear Williams & Wood said while sales were improving many companies will be rapidly running out of options.
Partner Andrew McTear said: “Many of the businesses we have seen experienced disastrous levels of sales at the turn of the year but have seen stronger sales in March and April 2009.
“However, many are still slightly below break-even point and damage already inflicted means that they are effectively holed below the waterline.
“Were it not for flexibility over payments to HM Revenue & Customs and trade creditors many of these businesses might have already failed.
“Other businesses have been living off strong order books since early autumn 2008 and now face an uncertain future.
“Our view is that many businesses are reaching a tipping point where, unless there is a sustained economic recovery, options will narrow rapidly as the availability of further credit slows to a trickle and mounting trading losses cause cash to run out.”
Mr McTear also urged companies struggling to pay creditors to take advice early, warning company chiefs may be blind to the scale of the problems within their own companies.
He added: “Our message to struggling businesses is that you do not have to face this alone.”
The recession has led to a 4.1pc contraction in the economy, with further quarterly falls likely.
Chris Starkie, chief executive of economic development partnership Shaping Norfolk's Future, said January and February were often the toughest months for many companies, particularly retailers, and said trade in the county was unlikely to significantly improve this year.
He added: “The reality is we are still in a serious recession. Companies fail in good times as well as bad and it is inevitable that more firms will fail in a downturn, particularly in the early part of the year after Christmas trading.
“January and February are the toughest times for retail business. These numbers illustrate the difficulties still being experienced in Norfolk and I wouldn't anticipate circumstances becoming any better in the rest of this year.”
Norwich Evening News