By Max Clarke
The latest figures published today by the Insolvency Service for the fourth quarter 2010 reveal that although corporate insolvencies in England and Wales have decreased, the number of corporate insolvencies in Scotland and Ireland is rising rapidly, up by 59.1% to 245 and 14.9% to 85, respectively - between Q4 2009 and Q4 2010.
Anthony Cork, Director of accountancy firm Wilkins Kennedy comments on the disparities in insolvency figures.
These figures show clear signs of a two-speed economy in the UK with England & Wales bouncing back from the recession whilst Scotland and Northern Ireland seem to be sinking deeper.
That is a concern as the strong performance of employers in London and the South East is thought to be propping up the recovery in England and Wales.
These results show there is no room for complacency over the economy in Scotland and Northern Ireland as the full force of the public sector cuts is yet to be felt. The public sector cuts are expected to hit Scotland and Northern Ireland harder as these places have a higher percentage of workers in the public sector.
The million dollar question is whether the private sector will be able to pick up the slack in the public sector. Failure on that point will increase unemployment and lead to more personal and corporate insolvency.
Wilkins Kennedy says that rising inflation and tight bank lending conditions are also expected to act as a drag on corporate performance with concerns over interest rates also looming on the horizon.
Another worrying sign for the economies of Scotland and Northern Ireland is a decline in the amount of lending taking place in those regions through the Government’s small business lending flagship the Enterprise Finance Guarantee (EFG) scheme.
Research from Aldermore, the new UK bank, shows that the amount of funding received by SMEs in Northern Ireland through the EFG scheme fell by 56% from £3.2 million in Q2 2010 to just £1.4 million in Q3 2010.
Funding to SMEs in Scotland through the EFG scheme fell by 18% from £15.2 million in Q2 2010 to £12.4 million in Q3 2010.