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News Release from: Deloitte & Touche
Edited by the Manufacturingtalk Editorial
Team on 21 August 2007
UK manufacturing bankruptcies rate falls
Although the number of manufacturing administrations or bankruptcies fell by some 20% in the first half of 2007, rising lending interest rates may reverse this trend.
Deloitte's latest analysis of administration figures showed a 20% decrease in manufacturing administrations in the first half of 2007, compared with the same period in 2006 Deloitte, the business advisory firm, reported that there were 297 administrations compared to 371 in the first half of 2006
This article was originally published on Manufacturingtalk on 11 Jul 2002 at 8.00am (UK)
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Reorganisation services partner at Deloitte, Lee Manning, said that these figures should be treated with caution: "Over the last couple of years we have seen so much liquidity chasing a scarcity of quality deals.
This is now changing, and with interest rates rising we will see an acceleration in the rate of companies going into administration as more marginal investments begin to buckle.
We should not be misled by the current figures, as at Deloitte, we are seeing more work dealing with troubled companies, which were acquired from earlier failed enterprises and which are now beginning to fail again with increasing momentum." He added: "Also, the banks are getting more cautious about lending money with interest rate rises beginning to bite, we have seen a marked increase in the rate of business reviews we are being asked to undertake".
Manufacturing reorganisation services partner.
Dominic Wong, added: "UK manufacturing continues to perform strongly this year but there are a number of indicators that more difficult times may lie ahead.
The cost of raw materials remains an issue for manufacturers and combined with the rising interest rates and continuing high energy costs, we have an environment which is likely to result in an increase in instances of financial distress going forward.".
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