Licensed trade sees sharp rise in business collapses

The Insolvency Service has reported a near-quarter rise in business collapses in the licensed trade for the last three months of 2010.

The figures show the number of firms going bust rose from 38 in the third quarter to 47 in the fourth.

Simon Bower, a partner at Baker Tilly Restructuring and Recovery, said: "While the sector overall saw fewer casualties in 2010 versus 2009, the public sector cuts seem to have already had a negative impact on consumer confidence, and there is certainly evidence of spending being reined in.

"Also, the adverse weather conditions discouraged customers from venturing outdoors to spend. This is true of some areas more than others, with more rural areas seeming to have fared worst overall."

Bower said the first quarter of 2011 could see further pressure mounting on parts of the industry "as it is hit by a traditionally quiet trading period, price increases driven by rising costs and the impact of the VAT increase".

However Bower said that with sporting fixtures and occasions such as the royal wedding taking place this year, "savvy traders should make sure they are well placed to take advantage of every opportunity to aid recovery".

A number of pub companies have already reported better-than-expected trading over the Christmas and New Year periods, partly due to softer comparables and price increases.

The rise in business collapses reported by the Insolvency Service represented a year-on-year fall of 22 per cent from 60 in the fourth quarter of 2009.

Creditors' Voluntary Liquidations (CVLs) also rose by five per cent from 189 in the third quarter of 2010 to 198 in the last three months.