February 04, 2011
The number of UK firms reporting major financial problems has risen annually since 2009, according to new research.
One leading insolvency firm’s latest "red flag alert" showed that 147,836 companies in the UK fell into financial trouble in the final three months of 2010, up 4% on 2009, the first year-on-year rise for seven quarters in a row.
The number of companies in trouble increased 20% on the previous quarter, much greater than the traditional seasonal uplift at the end of the year, according to the researchers. Just over 3,000 companies were in a "critical" financial position last year, owing £52.7 billion to their creditors, suppliers and service providers.
Figures also indicate that corporate insolvency numbers look set to increase from roughly 21,500 in 2010 to 23,500 in 2011, as widespread government spending cuts begin to take their toll.
"These figures show the first evidence of a hardening of creditor attitudes and the real strain being felt by UK companies at this point in the cycle," said a researcher. "For smaller businesses, we are entering the darkest hour before the dawn as they face the dual challenges of weak domestic demand and greater pressures from larger competitors and business customers looking to preserve their own profitability.”
Firms struggling to stay afloat have been encouraged to seek expert advice before the Government’s impending spending cuts fully dig in. Advice before the situation becomes too dire could be the difference between your business surviving or folding under the pressure of heavy financial difficulties.
