The North's Department of Enterprise is not often known for its perfect timing – so perhaps it is just a "lucky" coincidence that it is looking for a new director of its insolvency service at the same time as latest figures show a rapid rise in personal and corporate insolvencies in Northern Ireland.
According to UK official insolvency statistics for the second quarter of 2013, 894 people were declared insolvent in Northern Ireland. Most took the form or bankruptcy (374) while 167 people opted for debt relief orders – which enable people whose debts are not more than £15,000 to write them off without resorting to bankruptcy.
A further 353 people chose to go down the IVA (individual voluntary arrangement) route with their creditors to pay all or part of their debts and avoid bankruptcy.
Over the last year, the number of people declared insolvent one way or another in the North has risen to a record high of 3,330.
However the worrying and persistent rise in personal insolvencies pales when compared to the pace of corpo- rate insolvencies this year. Between the first and second quarters, corporate insolvencies rose by 91 per cent.
Corporate insolvencies
In the first quarter there were 55 but by the end of June, there had been 105 company liquidations over the most recent quarter. Last year saw the highest number of corporate insolvencies on record at 410.
According to Richard Ramsey, the chief economist with Ulster Bank in Northern Ireland, the rate of company failures in Scotland, Wales and England, while still an issue, is not as extreme as it is in the North.
In fact, the trend in Britain as regards corporate insolvencies has been downwards. The latest insolvency figures suggest Northern Ireland businesses are showing more signs of “financial distress” than companies in other parts of the UK.
Ramsay says there are two reasons for the North’s particular problems. “The exposure to the property boom and bust in Northern Ireland is one key factor and the other is the direct and indirect exposure to the Republic of Ireland’s economy.”
The Republic remains Northern Ireland’s largest export market and, even against the backdrop of the multitude of problems in both economies, exports to the Republic rose by £52 million to £1.3 billion in 2011-12.
The fall-out from the respec- tive property crashes continues to plague businesses and claim new insolvency victims every month. There is now an expan- ding club of bankrupt former property developers led by the likes of Peter Dolan and Mervyn McAlister.
There is another worrying aspect not immediately obvious in the latest UK statistics that is having a very detrimental impact locally – the rate of insolvencies among big-name retailers.
High street closures from Game to Clinton Cards, Peacocks and HMV in the last three years have led to the loss of hundreds of retail jobs.
Consumer spending
A quick walk through Forestside, one of the biggest shopping centres on the outskirts of Belfast, illustrates how the high street in the North is being affected by a significant fall locally in consumer spending levels and corporate pressure to close struggling stores.
The number of empty retail units in Forestside starkly highlights the vulnerability of the retail sector in general.
According to Ulster Bank’s chief economist, there are some signs that the local economic outlook may be improving. General business activity improved last month while new orders, exports and employment all grew during July.
But Ramsay is not predicting a fall in the rate of insolvencies in the immediate future, instead he expects it to stay along similar lines for at least the next 12 months.