Bankruptcies spiral out of control

PORTUGAL SUFFERED the highest rate of bankruptcies in the European Union in 2004. The country saw some 3,123 companies go under – seven times more than in Spain. This is a worrying tendency for such a small country and also represents a 30 per cent increase on 2003, according to a study by company statistical organisation, Coface Mope.

The worsening situation in Portugal flies in the face of the overall situation in other EU countries, which generally have registered a fall in the number of businesses going bust. The exception being Greece, which registered a 20 per cent increase in failed businesses in 2004.

However, the Europe-wide picture isn’t encouraging either, with 8,000 bankruptcies in Belgium, 6,000 in Holland and 6,000 in Austria. The most robust countries within the EU were the UK with a fall in bankruptcies by 13.4 per cent and Norway with 13.3 per cent.

However, despite Portugal seemingly in the same boat as other small EU countries, the difference is that the latter have more dynamic economies, better-qualified workers and a greater number of new companies being created on an annual basis.

According to statistics, the number of companies going out of business has risen year-on-year in Portugal from 783 in 1998.

On the other hand, Chapter 8 situations in Spain have plummeted 11.8 per cent to 570 confirmed for 2004, reflecting a dynamic economy enjoying a period of growth and stability. Strangely enough, this situation in Spain is a complete reversal to its situation only three years ago. In 2002, when Portugal registered an increase in bankruptcies by nine per cent, Spain suffered a horrific 89 per cent increase in Chapter 8 cases. Even so, taking the past seven years into account, the total number of bankruptcies in Spain never exceeded around 600 cases.

The same can be said of Ireland, long seen as a plucky Western tiger economy with only 320 company failures registered in 2004. C.G.