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Insolvency rate decline is a 'temporary reprieve'

6 November 2009

The rate of business failures slowed in the third quarter of the year, new figures reveal, although UK companies still face challenging conditions.

Data released by the Insolvency Service show 4,716 companies were liquidated in the three months to September, which is up by 14.6 per cent on the level seen 12 months previously.

However, Carl Jackson, head of recovery firm Tenon Recovery, believes it is only a temporary reprieve.

"Low interest rates, the temporary reduction in Value Added Tax, low inflation ... have given firms some breathing room, but there is a feeling that these initiatives are simply delaying inevitable failure," he commented.

"Once withdrawn, there will be a flurry of failures."

The Bank of England announced plans to expand its programme of quantitative easing by £25 billion on Thursday (November 5th), while interest rates were kept on hold at 0.5 per cent for the eighth successive month.

Categories: Financial Management


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