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November 7, 2009

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Mixed picture of insolvencies

COMPANY insolvencies in England and Wales fell in the third quarter, although personal defaults on loans continued to rise, official figures showed yesterday, suggesting economic recovery was still patchy.

The Insolvency Service said individual insolvencies rose by 2,000, or 6 percent, from the second quarter to 35,242 in the three months through September and were up a massive 28 percent from a year earlier.

Company liquidations fell 5 percent from the second quarter to a total of 4,716, which was still 15 percent higher than a year earlier.

Alan Tomlinson, partner at Tomlinson insolvency practitioners, said company failures may increase next year if tax collectors at the Inland Revenue take a tougher line.

"While the (Inland) Revenue has been instructed to be cooperative, this will not continue indefinitely," Tomlinson said.

"There is talk that the recession will technically end in the fourth quarter, but for some companies the recession will really hit home when the Revenue calls in its debts," he added.

Separately, the Office for National Statistics said output prices -- the cost of goods at the factory gate -- were up 0.2 percent from September to October.

Manufacturers' input prices rose 2.6 percent compared to September, putting the overall index for October 0.1 percent above a year ago.

Jonathan Loynes, chief European economist at Capital Economics, said producer prices were bound to rise further on an annual basis, since energy prices spiked to all-time highs last year.

"Unless energy prices rise much further, the pick-up in PPI should be relatively short-lived and nowhere as big as that seen last year, when input price inflation peaked at 34 percent," Loynes said.


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