Slump takes a heavy toll
BUSINESS organisations across the region welcomed the additional £25bn boost to the UK economy from the Bank of England - but it came too late to save many of the 3,000 North-east firms that have crashed since the start of the banking crisis.
According to Tenon Recovery, more than 2,600 companies have fallen into liquidation and a further 800 went into administration.
And the rate of collapse is accelerating, according to analysts, with 19.1% more business failures so far this year than in the whole of 2008.
Print, leisure, haulage and property development firms have felt the brunt of the downturn locally, while national figures released today by Ernst & Young showed insolvencies among car dealerships have doubled this year, despite a rally in sales on the back of the government’s extended scrappage scheme.
Defensive bank bosses, under pressure from Government to extend lines of credit to SMEs, say businesses aren’t biting.
But 25% of entrepreneurs interviewed by Tenon said they had failed to secure the necessary funding to expand their businesses.
Ian Kings, head of Tenon Recovery in the North-east, said: “Corporate insolvency levels are already at record highs and we are unlikely to see any improvement in the next 18 months.”
The pound rose yesterday on the back of the Bank of England Monetary Policy Committee’s decision to authorise what is likely to be its last top up under QE, taking the total stimulus to £200bn.
Martin Pellew, president of the North East Chamber of Commerce urged the MPC “not to give in to temptation to exit from the stimulus package too early”.
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