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Good news for economic recovery

PUBLISHED: 08:46 18 February 2010 | UPDATED: 16:43 30 June 2010

Hopes for a revival in East Anglia's economic fortunes were lifted yesterday as it emerged that the number of companies going bust has halved.

The figures revealed corporate insolvencies fell for a third consecutive quarter in the last three months of 2009, with the rate in Norfolk down by 50pc compared to the end of 2008.

Hopes for a revival in East Anglia's economic fortunes were lifted yesterday as it emerged that the number of companies going bust has halved.

The figures revealed corporate insolvencies fell for a third consecutive quarter in the last three months of 2009, with the rate in Norfolk down by 50pc compared to the end of 2008.

The research, carried out by Norwich-based business rescue and insolvency firm McTear, Williams & Wood, appeared to show the region - and Norfolk and Cambridgeshire particularly - has weathered the recession far better than the rest of the country.

While the rate of corporate insolvencies nationally was 69pc higher at the end of 2009 than before the start of the recession in 2007 - the number of companies failing was 27pc higher in Norfolk and 26pc in Cambridgeshire.

But business leaders issued a note of caution, warning that the East Anglian economy remained "fragile".

Caroline Williams, chief executive of Norfolk Chamber of Commerce, said: "Talking to the business community at the moment, people are starting to see more inquiries and the length of time between orders being talked about and coming through is shortening."But I think there is a lull - and the reason for that lull is that we are coming up to elections. We've seen a really positive trend in Norfolk and confidence is growing, but I think businesses are still cautious and taking one step at a time."

The latest unemployment figures, published yesterday, also showed a sharp rise in the number of people in East Anglia out of work and claiming benefits.

The statistics for people claiming jobseeker's allowance showed a rise of 2,803 in Norfolk, Suffolk and Cambridgeshire between December and January as shops, pubs and hotels laid off seasonal workers.

In Great Yarmouth one in 10 men was out of work and claiming benefits last month - the highest rate in the six counties of the East of England and far higher than the national average for the UK's male workforce (6.1pc).

Yet McTear, Williams & Wood's research appeared to defy predictions that insolvencies would rise steeply at and after the end of the recession.

Andrew McTear said in the recession in the early 1990s company failures peaked at three times the pre-recession rate.

He said while government action may have staved off such a big increase in company failures, the rate was likely to rise in 2010.

He said: "Despite the current recession being longer and sharper than the recession in the early 1990s it does seem that the massive government and Central Bank stimulus has kept the lid on the number of business failures for now.

"The question is has this action stopped company insolvencies or simply delayed them."

He added: "What is clear is that the recession just past is playing out differently and today any such predictions [of steep rises in insolvencies] would not appear plausible.

"However, some increase from the current surprisingly low level is widely predicted by insolvency professionals even if the recovery continues, as business insolvencies tend to lag the general economy by 18 months.

"HM Revenue & Customs' toughening stance on 'time to pay' arrangements, previously lenient landlords becoming harder on rent demands and trade credit becoming restricted are all likely to lead to insolvency figures rising again later this year."

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