Company insolvencies on the rise in Q2 2009

New figures from the The Insolvency Service show the total number of company voluntary and compulsory liquidations rose by 2.9% in Q2 2009 compared to the previous quarter, an increase of 39.1% on the same period in 2008.

Overall there were 5,055 business liquidations in England and Wales from April to July 2009.

Of these 1,457 were compulsory liquidations and 3,598 creditors voluntary liquidations.

In addition the official statistics reveal a further 1,529 corporate insolvencies, a rise of 22.7% on the previous year.

Some small business groups believe the big rise in firms going out of business is due to banks’ failure to lend to the sector.

Phil McCabe of the Forum of Private Businesses said:

A variety of factors are contributing to soaring insolvencies, but they all lead to the same major symptom – a lack of cash … our research has consistently shown that demand for finance is not being satisfied by the supply from lenders.

What is not, of course, clear from the business closure statistics is how many were potentially viable had the credit crunch not combined with a deep recession.

Every business closure is a tragedy.

But in the worst recession the UK’s seen in a generation, the number of businesses closing does not seem particularly surprising or indeed, particularly extraordinary from a historical perspective.

[Picture credit: secretlondon123 licenced from Flickr]