Bankruptcies fall 25 percent in April

Corporate bankruptcies have continued to decline in Sweden, falling 25 percent in April compared to the same period last year.

The figures, from business and credit information company UC, show a total of 493 companies in Sweden declared bankruptcy last month. In the first four months of 2010, the total number of bankruptcies was 2083, a decline of 19 percent from the same period in 2009.

The improvement in the economy has increased the purchasing power of consumers and most sectors remain optimistic about the future, the report said.

“The increased demand that many companies are currently experiencing has led to a considerable improvement in their financial situation, with enhanced liquidity for many firms,” said UC marketing director Roland Sigbladh in a press release.

Almost every county and sector reported a positive trend of steadily decreasing bankruptcies, especially in metropolitan areas. Bankruptcy rates fell in the construction sector, UC reported, which reported an increase in new orders for the first time in two years. The exception was the the hotel and restaurant sectors, where bankruptcies in recent months have increased.

“In general, companies in these industries have small margins, which become an additional concern in a weak economy,” said Sigbladh. “In addition, the industries are highly competitive and more sensitive than many others. Many companies are still restrictive about business trips and conferences, something that has consequences for restaurants and hotels.”

Most counties reported declining bankruptcy rates and all of the three large metropolitan counties noted large declines. Västra Götaland county showed the largest decrease in April, where bankruptcies fell by 37 percent. Since the beginning of the year, the number of bankruptcies has fallen most in Skåne county.

Although most signs now point in a positive direction with decreasing bankruptcies and increased demand and production, there are several uncertainties regarding the future.

“Despite a strong Swedish economy, we have international concerns, particularly the crisis in Greece,” said Sigbladh. “However, other European countries also have significant problems. Moreover, exporters, among them many heavy industries and their suppliers, may be affected if the kronor continues to strengthen against the euro.”

He added, “The parliamentary election in the autumn will add to the uncertainty because companies want to know what economic conditions will prevail. In addition, potential interest rate increases may result in consumers tightening their finances.”

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