Contact: Sorrelle Cooper
Deloitte
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While the total UK company liquidations figures, announced by the DTI today, have shown a small rise of 5%, manufacturing and retailing are showing much stronger signs of distress.  Even more striking is the leap of 81% in the personal insolvency figures compared with last year.

Lee Manning, Reorganisation Services Partner at Deloitte, commented:

“The big increases this year have been in manufacturing where chemical manufacturing in particular is up 62%, and certain areas of retailing such as food, drink, tobacco and filling stations (over 40%).  UK manufacturers at home are being increasingly squeezed out by low cost international competitors, particularly in the Far East and Eastern Europe.  We are seeing a growing trend of manufacturers tapping into this cheaper means of production through outsourcing and closure of their UK facilities.

“In terms of retail, while we have not seen the big crash on the high street expected last quarter, smaller retailers are struggling.  Life has become increasingly difficult for these retailers, from the corner shop to the independent filling station, as they cannot compete on price and location.  The future for these retailers is not in competing with the larger multiples but in differentiation and tapping into the growing consumer demand for a shopping ‘experience’. The decline in the number of independent filling sites is a reflection of the alternative use value of these sites for property developers, which vastly exceeds their exiting use value.”

In response to the huge rise in personal bankruptcy, Manning added: “Since the liberalisation of bankruptcy legislation has taken effect, bankruptcy has become a much easier process.  Bankruptcy now typically lasts for only one year and, socially, the stigma of bankruptcy is gradually being eroded.  Why would a person struggle to pay off a debt mountain when filing for bankruptcy is much simpler and, in many situations, a much shorter term solution?  We have also seen a marked increase in the number of Individual Voluntary Arrangements (IVA).  This trend has developed off the back of a rapid growth of specialist businesses offering IVA services to individuals who cannot manage their mounting personal debt burden, fuelled by the easy access to multiple sources of credit.”

Ends

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In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Known as an employer of choice for innovative human resources programmes, it is dedicated to helping its clients and people excel. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.  The information contained in this press release is correct at the time of going to press.

Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.

The information contained in this press release is correct at the time of going to press.