Record number of companies go bust
27,000 firms forced to close during economic crisis, Conservatives say
More businesses have gone bust in this than in any previous recession, with 51 companies folding every day, according to Conservative party research.
Almost 27,000 have closed since the economic crisis began, compared with 24,000 during the early 1990s recession and 9,500 in the downturn of the early 1980s. The Tories claimed the figures showed that industry was facing its worst crisis in decades. The Government countered that the proportion of firms going to the wall was less than in half of previous economic downturns.
In a foretaste of likely election skirmishing next year over the state of the economy, a senior minister said the Tories would have "stood by" and presided over more company failures.
A total of 26,978 businesses have gone into liquidation or been declared insolvent since the recession began in the second quarter of 2008. That compares with 9,502 business collapses in the 1980-81 recession during the early years of the Thatcher government and 24,123 in the 1990-91 downturn under the Thatcher and Major administrations.In the nine-month recession of 1973-74, 1,925 firms went under. The high number of company failures this time is a result of the recession being the longest on record: it has now lasted for six quarters. The economy has contracted by 5.9 per cent over that period.
Alistair Darling, the Chancellor, has forecast that the economy will resume growth at the end of this year.
The Conservative research, based on figures from the Insolvency Service, suggests the recession could be deepening. It said 4,716 companies went to the wall during the third quarter of this year – 51 a day – an increase of 15 per cent on the same three months in 2008.
Last night the Tories claimed Mr Darling had tried to "cover up the truth" about the extent and impact of the recession. John Penrose, the shadow business minister, said: "This confirms what many people know already – far from abolishing boom and bust, Gordon Brown has handed this country its worst recession ever. Labour's recession has destroyed more businesses than any other recession since records began."
Liam Byrne, the Chief Secretary to the Treasury, said the number of corporate insolvencies in 2008 was 21,811, compared with 29,985 in 1991 and 33,203 in the following year. He also pointed out that the rate at which companies had gone into liquidation in England and Wales was 1.76 per cent in the 1990s recession, compared with 0.74 per cent during the current downturn. The rate for Scotland was 1 per cent in the 1990s and 0.4 per cent for this recession.
Mr Byrne said the Government had been praised by the International Monetary Fund for its "bold and wide-ranging" initiatives to support the economy, including helping 160,000 businesses defer £4bn in tax. He added: "This is in stark contrast to the Tories who would have stood by and let the recession do its worst. Even now, the Tories would cut back support for the economy, putting jobs, homes and businesses at risk."
Meanwhile, the TUC warns today that long-term unemployment has doubled to more than 200,000 since last Christmas. It says the number of people claiming jobseeker's allowance for more than 12 months has increased from 103,930 in December 2008 to 201,015 in November 2009. And it predicts that the number of long-term dole claimants will continue to rise into the New Year.
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