Begbies gives Manchester the red flag
MANCHESTER had more than three times as many companies going under than Liverpool in the final quarter of 2008, according to new figures from insolvency firm Begbies Traynor.
And it had 28% more businesses facing critical conditions – winding-up petitions or County Court Judgments requiring payments of more than £5,000.
Across the North West, the number of businesses with critical problems rose to 746 in the final three months of 2008, up 75% on the same period last year, and up 21% on the third quarter of 2008.
The figures from Begbies’ quarterly Red Flag alert show that Manchester had 178 insolvencies and 69 companies facing critical problems in the fourth quarter of 2008, up on the previous quarter’s critical figure of 54.
It was way ahead of Liverpool, which had 53 companies enter insolvency, while the number of critical companies increased to 54 in the fourth quarter from 36 in Q3.
But David Moore, partner at Begbies Traynor in Liverpool, told TheBusinessDesk that Liverpool could expect to see a marked increase in the number of insolvencies during the first and second quarters of 2009.
He added: “However, I think it is dangerous to be too pessimistic and there are still healthy businesses out there which are taking the required action. I sincerely hope that the growth and success which we experienced in Liverpool throughout our Capital of Culture year will be sustainable to some degree and that the legacy will stand local businesses in good stead in years to come.
“It is important to be realistic and the cash generated during the Christmas period will only last for so long. The Merseyside retail sector in particular received a boost from a range of new developments and outlets which brought a flood of customers from outside the region. Unfortunately, I think we are now riding the last of those waves. The mini-boom that followed Liverpool’s Capital of Culture year will not in itself see us through a global recession.”
Gary Lee, partner at Begbies Traynor in Manchester, said: “We are seeing more companies going straight from being in the good books of the banks into administration. The middle ground is narrowing as creditors take swift action against companies that show signs of weakness.”
He added that the statistics show a dramatic increase in transport companies facing critical problems in the final quarter of 2008, as compared to the last quarter of 2007.
He said: “The slump in residential property and consequent retail slowdown has had a knock on effect on the transport industry, as supply chains have been squeezed and logistic operations scaled down to reflect the downturn in consumer spending. The fall in petrol prices has slowed down the pain a little bit for transport and logistics companies, but it will not be enough to counter the recession.”
