Insolvencies rise to decade high

The environment for small companies is still tricky

The number of insolvencies in England and Wales has jumped to its highest level in almost a decade, according to an industry report.

More worrying is the forecast by credit insurance group Euler Hermes that bankruptcies are set to rise further.

In 2003, insolvencies rose 7.7% to 50,500 from the previous year. That compares with a drop in the US and a slowing rate of increase in Europe.

The main contributor to the rise are sole traders, Euler Hermes said.

Break down

That sector saw insolvencies rise by 19% in 2003 and accounted for more almost two-thirds of the annual total.

By contrast, the number of corporate bankruptcies declined, finishing the year 13% below 2002 levels.

The industries that saw the biggest improvement were retailing and agriculture.

Conditions worsened, however, in the services, transport-communications and wholesale trading sectors.

David Atkinson, country risk manager at Euler Hermes, said that: "The generally good macroeconomic prospects...should contribute to a further fall in company business failures and a progressive stabilisation in individual bankruptcies."

"But the total number of bankruptcies will remain close to 2003 levels, rising 2% to around 51,300 in 2004 and a further 0.2% in 2005 to 51,400."