By Max Clarke

Corporate insolvency and turnaround specialists, RSM Tenon predict that annual corporate insolvencies over 2010 have dropped from the record level set in 2009 of 25,432 by just over 17% to around the 21,000 mark. With the upcoming increases in VAT, cutbacks in the HMRC Time to Pay scheme and the likely rise in interest rates combined with the public sector cuts and increasing inflation, RSM Tenon is predicting that the number of corporate insolvencies for 2011 will begin to increase again with an upsurge in the latter half of this year.

Statistics from Tracker, RSM Tenon’s early warning system, show that a quarter of all corporate insolvencies in 2010 were in the Business Services sector which includes IT, advertising, security and design companies. This was followed by the Construction sector who accounted for 17% of the total. The Hospitality and Tourism industry were the next worst hit making up 8%, followed by the Property sector at 7% of all corporate insolvencies.*

RSM Tenon Tracker’s figures shows that the largest drop in corporate insolvencies over 2010 was in the Industrial Materials sector which saw a decrease of 35% on the previous year. This was followed closely by the Electrical and Electronic manufacturers that saw a decrease of 33% in insolvency with both the Finance and Wholesale sectors decreasing by 31% on 2009 figures.

RSM Tenon’s statistics also show that the smallest decreases of corporate insolvency, well behind the average of 17% was in the Wood, Paper and Board sector, the Public Services sector and Hospitality and Tourism sector (10%, 10% and 12% respectively). In addition to the aforementioned statistics, the research also showed that no sector saw a material increase in corporate insolvencies over 2010.^

Carl Jackson, Head of Corporate Insolvency at RSM Tenon, said:

“As we look back over 2010, we have seen a record decrease in corporate insolvency levels. Around 21,000 businesses have had to declare corporate insolvency throughout the year, which is still approximately 33% higher than pre-credit crunch levels of 2007. We expect that this figure will increase in the latter half of 2011 as the effects of government actions including the VAT rise and the fuel price increases take their toll on businesses up and down the Country. In our experience, many businesses are teetering on the brink of collapse waiting for an upturn but time is of the essence and our concern is that many will not be able to survive’.