Almost eight times as many companies are having critical problems that could lead to insolvency than at this point last year, according to a report published today.

The report from the business restructuring specialist Begbies Traynor is a further sign of the sharply worsening economic climate.

It says that during the second quarter of the year, 4,258 companies faced "critical" problems, defined by the firm as businesses with county court judgments of more than £5,000 against them or winding-up petitions. That compared with just 542 in the second quarter of 2007.

From historical data, Begbies predicts about 15% of companies with critical problems will be insolvent within a year.

Ric Traynor, Begbies Traynor chairman, said figures for the first quarter of the year showed the credit crunch was beginning to have a material impact on businesses in Britain. "With credit conditions still tightening, these new figures demonstrate that the effects are certainly getting worse and we would anticipate that they will continue to do so, certainly until the end of this year at least," he said.

The company said creditors, under pressure themselves, were far less patient, not least Revenue and Customs.

The pain is being felt across the economy but the industry suffering the most is construction, which has 639 companies facing critical problems according to Begbies, up from 136 a year ago, as the credit crunch torpedoes the property market. In the past few weeks, the industry has announced thousands of job cuts.

Retailers are also suffering. According to the report, 200 are facing critical problems compared with 46 a year earlier, reflecting falling consumer confidence.

IT has seen the sharpest percentage rise in companies facing difficult conditions: 113 in the second quarter of this year, up from 24 last year - a 371% increase.

"In times of economic slowdown, you would expect the construction and retail sectors to suffer, and that is certainly borne out by our research," said Traynor. "However, many other industry sectors are being affected by the current conditions. Credit lines have dried up and companies which might have been supported by extended credit up to a year ago are now at real risk."



See Original Article

If you need help with corporate debts then call now.

Call us on: 0800 071 1616

Email us on: info@debtsgone.co.uk

Website: www.debtsgone.co.uk