The number of corporate insolvencies in the West Midlands continued to fall during the fourth quarter of 2009, but restructuring experts are warning that the economic recovery could bring more business failures.

According to analysis by PricewaterhouseCoopers, across the UK 4,380 companies became insolvent in the three months to the end of December 2009 – a fall of 4.8 per cent compared with the previous quarter.

In the West Midlands, the number of corporate insolvencies fell to 505 in the fourth quarter of the year, compared with 569 in the previous quarter - an 11.2 per cent reduction.

Rob Hunt, partner in the business recovery services practice at PricewaterhouseCoopers in the Midlands, said: “There is no question that businesses in the Midlands have been hit hard by the recession and it is good to see the number of insolvencies in the region starting to tail off.

“These figures may appear to support the view that the bottom has been reached and this may be the case for the economy, but traditionally we see more businesses failing coming out of the recession than on entering.

“Cash management should and will remain top of most business agendas.”

In 2009, the number of corporate insolvencies in the West Midlands was 2,298, compared with 1,734 in 2008 – an increase of 32.6 per cent.

Mr Hunt added: “The year-on-year comparison shows just how deeply the region has been affected by the recession over the past year and businesses in the region should continue to expect challenging trading conditions in 2010.”