UK businesses ‘facing record insolvency rates’

Posted 23/12/2009

Companies in the UK are more at risk of insolvency during the current recession than during any previous economic downturn, according to research.

The Conservatives have highlighted Insolvency Service figures which show that a total of 26,978 firms have failed since the second quarter of 2008, which marked the beginning of the slump.

Furthermore, business failure rates may even be on the increase, with 4,716 companies having gone bust in the third quarter, 15 per cent more than in the same period of 2008.

According to the figures, the number of insolvencies is now higher than those recorded during the recessions in the 1980s and 1990s, while the current slump has also persisted for a longer time.

John Penrose, the shadow business minister, warned that this may continue, as the UK’s economy is yet to show signs of recovery.

This comes after accountant Woods Squared earlier this month warned that 2010 is likely to be “hugely challenging”, adding that many firms expecting to be rescued from insolvency by Christmas sales are likely to be disappointed.