Rate of administrations falls over 12 months but increase expected

The rate of failed businesses entering administration has fallen dramatically over the course of 12 months. In the first quarter of 2010, there were a total of 783 for England and Wales, compared with 1,311 in the same period last year.

This equates to a shocking 40.3 per cent drop over one year. The figures were released by the Government's Insolvency Service recently.

Malcolm Shierson of Grant Thornton's Recovery and Reorganisation unit commented: "People will be relieved that there has been a drop in the number of business failures in the first quarter of this year. Unfortunately, we expect to see an increase in administrations now that the general election is over."

"Whomever forms the next government, UK economic growth will be hampered by projections reductions in public spending and a likely increase in taxes. It is likely that lenders will take a tougher stand on struggling enterprises, which may also be squeezed as "Time to Pay" Tax schemes are phased out."

Company liquidations have also dived from 4,964 in the first quarter of 2009 to 4,082 for the same period this year, representing a fall of 17.8 per cent.

Mr Shierson makes it clear that "the health of the UK economy is mainly reflected in the number of administrations", which occur amongst large businesses, while liquidations are more typical for smaller firms.

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