'Fragile recovery' led by UK manufacturing companies

4 February 2011
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6 February 2011 | Angeline Albert

Fewer UK manufacturing firms went bust in 2010 than the year before – a sign that the sector is leading the UK into a “fragile” recovery, research by BakerTilly found.

The number of manufacturing firms going into administration dropped by 37 per cent in 2010 to 477, compared to 761 in 2009.

Across all sectors, the number of companies going into administration in England and Wales last year fell by 32 per cent to 2,831.

Bruce Mackay, partner at Baker Tilly Restructuring and Recovery,said: “For UK Plc, this has to be good news overall – particularly in manufacturing. Transport and logistics also fared well with a 30 per cent fall year-on-year, which could be seen as a spin-off of improvements in manufacturing as goods start to move around again. This is encouraging news for the supply sectors despite the fears of the impact of recent adverse weather conditions and fuel price increases affecting trade.”

He added: “Looking ahead though, the recovery remains fragile. There is likely to be a time-lag effect which could hit the quarter one stats this year - with the impact of 0.5 per cent negative GDP growth in quarter four 2010, record bad weather and jobs uncertainty yet to be seen in full.”

This week, Baker Tilly released statistics showing a 24 per cent drop in administrations across England for quarter four, when compared to the same time period in 2009. The drop in insolvency numbers is much more pronounced in London and the South East at 37 per cent.

Earlier this week, SM reported growth in the UK manufacturing sector rising to a record high at the start of 2011. It showed the pace of growth in new orders and employment was a record, while output expanded at its fastest rate since the mid-1990s.

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