PwC analysis: UK insolvencies at highest level for 15 years

Published at 10:04 AM on 06 February 2009

PricewaterhouseCoopers LLP analysis of today’s national corporate insolvency statistics found that the number of corporate insolvencies in quarter four of 2008 has risen by 69 % the same quarter of last year.

The total number of insolvencies in 2008 was 21,082, which represents a 34% increase on the total number of insolvencies in 2007. This is a 15 year high for numbers of insolvencies and shows that the recession is really starting to hit the UK.

In total, 6,224 businesses across England and Wales entered into insolvency in October, November and December of last year.

Mike Jervis, partner in the business recovery services practice at PricewaterhouseCoopers LLP, commented:

“We predicted in the last quarter that the small decrease in figures would be the calm before the storm. A 69% increase on the same period last year shows that the lack of confidence and capital is now impacting a much broader range of the economy than we have experienced to date, demonstrating also the speed at which companies are now filing for insolvency.

“At PwC, we have also seen an increase in our case load in a broader range of sectors, demonstrating how corporate insolvencies now appear very much to be endemic across the board.

“Despite grabbing the headlines on an almost daily basis over the last quarter, insolvency is not necessarily viewed as a death sentence anymore and businesses are seeing that insolvency techniques can be used as a mechanism to salvage and revitalise ailing operations. Used in the right circumstances, insolvency procedures can help to rescue a company, saving jobs, and preserving value for the creditors and continuity for suppliers.

“It’s an established fact that the companies who emerge strongest from a recession, are those who are relentlessly reassessing their business models to ensure they survive. Downside scenario planning should be at the top of the boardroom agenda.”

Which sectors are struggling the most?

PwC’s own analysis of all insolvencies in Q4 2008 found that the sectors suffering the highest percentage rises in numbers of insolvencies were Real Estate and Retail, whose numbers increased by 228% and 72% respectively from the same quarter last year to 243 and 557 insolvencies.

Numbers of construction and manufacturing insolvencies also remain high with 692 construction and 568 manufacturing insolvencies this quarter. The quarter also saw an increasing number of Hospitality and Leisure administrations, with 251 insolvencies; a 54% increase on the same quarter last year.

North versus South

Our analysis of PwC figures, shows that London has the highest number of insolvencies with 1,100 a significant 56% increase on the same period last year and driven by the high number of retail and real estate insolvencies in the region. However, the South West, Northeast and Cumbria saw the highest percentage increases with 79% and 43% increases on the last quarter to totals of 88 and 182 insolvencies respectively. The North and South generally seem to be weathering the storm in a similar way, with overall figures for the two sides of the UK being generally the same. No regions have shown a decrease in the number of insolvencies, with Wales having the lowest percentage increase on the same quarter last year, 42%. The South West suffered significantly with a considerable 125% increase on last year’s insolvency figures.

ENDS


Notes to Editors:

1. For further information on the current economic climate from PricewaterhouseCoopers, please visit www.managinginadownturn.com 2. The insolvency figures have been collated by PricewaterhouseCoopers LLP and are based on Administration, Administrative Receivership, Company Voluntary Arrangements and Creditors’ Voluntary Liquidation appointments in England and Wales during the fourth quarter (October, November and December) of 2008. For the purposes of this data collation, where a group of companies entered into insolvency that group has been counted as one appointment. 3. These figures do not include a one off exceptional situation in October 2006 where 850 businesses filed for insolvency in one day as part of a carousel fraud. 


For more information contact:

Stephanie Howel
Advisory PR Manager, PwC 
Tel:020 7213 2421 
Mobile:07734 456 098 
 

Katherine Howbrook
Financial Services, PR Manager, PwC 
Tel:020 7212 2711 
Mobile:07515 119 096 
 

Mike Jervis
Partner, PricewaterhouseCoopers LLP 
Tel:020 7212 6610 

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