Increase in South West Insolvencies – Deloitte

Press Release

Regional Rise in Appointments is 4th Highest in the UK, as Credit Crunch Starts to Bite.

Latest analysis of administration and receivership figures by Deloitte, the leading business advisory firm, shows that insolvencies in the South West are up by 26 per cent for the first quarter of 2008 compared with the same period last year.

There were 44 insolvency appointments in Q1, up from 35 in the corresponding quarter last year – the highest regional percentage increase after the North West, North East and East Anglia.

Meanwhile there were 27 appointments in the final quarter of last year, which means the figure for the following three months is up 63 per cent.

Richard Hawes, reorganisation services partner at Deloitte in Bristol, said his team was busier now than at any time in the past five years – and forecast that insolvencies would continue to increase for some time to come.

“We have had 10 administration and receivership appointments in the last couple of months, whereas normally we would expect two or three, and this is just the start of what will be a very busy period,” he said.

“All sectors are being affected, but in our region, retail, financial services and especially construction, are the worst hit.”

Nationally, the figures show a fall in the number of retail and manufacturing businesses going into administration in Q1 (43 per cent and 39 per cent respectively), with the biggest increases being registered in recruitment and business services (136 per cent), printing and publishing (71 per cent), and mining, energy and agriculture (67 per cent).

“The national data demonstrates that it takes some time for shifts in the economic cycle to affect profits, administrations and unemployment levels, and suggests that the downturn may be felt for some time to come,” said Richard Hawes.

“While the overall retail figures are down across the UK, in April we have seen a rise in household related retailers (selling furniture, carpets and electrical goods) going into administration. When consumers start to feel the pinch, discretionary expenditure, including improving the house, is one of the first items to be struck off the ‘shopping list.’

“The rise in administrations in the construction industry is another indicator that both consumers and developers are preparing for a harsher financial climate.

The drop in manufacturing administrations nationally so far this year, suggests the sector may be in reasonable health compared with other industries. “

“While the devalued pound may not be having the ‘gold-rush’ effect some had predicted, UK manufacturing industry may be buoyed by its evolution from an expensive mass-producer to a world-leading developer of innovative products. Food manufacturing and, in particular, bakeries are one group of manufacturers who have been hit hard by the rise in cost of foodstuff raw materials.”

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