The number of businesses collapsing has jumped to nearly 33,000 so far this year, fuelling fears of an economic slowdown. According to D&B - formerly Dun & Bradstreet - the business failure rate has increased by 7.3% in the first nine months of the year compared to the same period last year, reaching the highest rate for three years.
Philip Mellor, senior analyst at D&B, said: ‘Last quarter we had strong hopes that the rate of business failure in Britain had started to decline. I believe it would have done so but for worries about the continuing slowdown in the UK and other European companies.’
Mellor predicted the situation could get worse in the next three months, as consumer spending falls amid fears of rising unemployment.
Business failures in London, often a barometer for the future of the rest of the country, increased by 8.3%, including a 25% increase in smaller business bankruptcies. But insolvency practitioners said that they had not seen a noticeable increase in company collapses.
‘We’ve been busy for the past three years, but haven’t seen a marked upturn in the last quarter,’ said Jim Tucker, a corporate recovery partner at KPMG.
However, Tucker said that some sectors were faring worse than others.
‘Large swathes of manufacturing are suffering from the high exchange rate and a lack of investment,’ he said.
He added that insolvency practitioners were still seeing a shake-out in the telecommunications industries.
This was a view echoed by Jeremy Willmont, a corporate recovery partner at Moore Stephens.
‘There has been a creeping up in the number of insolvencies,’ he said.
‘People have been hanging on but with the number of redundancies coming through will feed through to High Street spending.’
Willmont added that manufacturing was ‘almost grinding to a halt’ and predicted that more manufacturing jobs would move abroad.