Company failures at highest total for six years

The number of companies going to the wall surged to a six-year high in the third quarter of the year, according to the latest figures to highlight stress in the corporate sector.

The number of companies going to the wall surged to a six-year high in the third quarter of the year, according to the latest figures to highlight stress in the corporate sector.

There were 3,776 company insolvencies in England and Wales in the three months to 30 September, an 8.6 per cent rise on both the previous quarter and the same period a year ago. It is the highest number since 1994, Department of Trade and Industry figures showed. A separate survey last week showed that profit warnings by floated companies rose in the quarter for the first time in two years.

There was more evidence that the economy is slowing from Halifax, which reported the lowest growth in house prices for 17 months, and from a survey showing that confidence among service sector managers has dipped.

The insolvencies figures came a day after the Government unveiled measures to improve the survival chances of companies that run into trouble.

The accountancy firm PricewaterhouseCoopers said the figures were a "timely reminder" of the need for reform.

Neville Kahn, business recovery services partner at PwC, said they reflected rising difficulties in the small firms sector. "They are particularly exposed to intense competitive pressures in a number of industrial sectors, such as the retail supply chain and automotive component manufacturing." This tended to affect the North and Midlands, but the South had been hit by the troubles in the e-business sector, he said.

Halifax, the high street mortgage bank, said the price of the average house fell 0.4 per cent in October, taking the annual rate of inflation to 5.7 per cent, its lowest since May 1999. "Economic growth is likely to slow over the coming quarters, which will constrain housing demand and therefore house price growth," it said.

A survey by the Centre for Economics and Business Research revealed a sharp drop in consumer confidence. The CEBR said retailers' confidence was even more fragile.

The services sector continued to expand in October, according to a report by the Chartered Institute of Purchasing and Supply, but growth of new business remained below the level of recent months as firms reported a moderation in both business and consumer confidence in the economy.