A musical guide to liquidations

Research by accountancy group UHY Hacker Young expects that the number of UK companies going into liquidation rose by nine per cent last year, from 23,500 companies in 2008-09 to 25,600 in 2009-10.

But it’s not over just yet. You can expect liquidations to peak as the economy emerges from recession.

Why, you ask? These three songs help to explain:

  1. History Repeating – Dame Shirley Bassey. If we take a look back at 1991/92, when the UK started to emerge from the last major recession, an even bigger total of 27,300 businesses were put into liquidation.  You can expect the same this time around. 
  2. Turn around (every now and then I fall apart…) – Bonnie Tyler. You won’t get as much help to turn your business around as you did last year. Companies will fold as government initiatives – such as the Enterprise Finance Guarantee Scheme and Time to Pay – get wound down. Although these initiatives helped companies limp on through the recession, they’ll inevitably have to stop (probably after the election) and some companies will fold as a result.
  3. Under Pressure – Queen. Expect to come under increasing pressure from banks and the taxman. The government has lent on banks and HMRC to go easy on companies in the last year, but once the election is out of the way, expect creditors to toughen their stance. A hardening of their position will see liquidations spike.
But don’t lose hope – history also shows that the economy always bounces back. The real question is, will you be there to benefit from the renewed growth?

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