Struggling firms up 6% and set to grow

18th Jan 2010 10:44

Insolvency specialist Begbies Traynor saw a 6% rise to 140,000 in the number serious or critical financial difficulty in the final quarter of 2009.That figure was 14% lower than the same period in 2008, in the aftermath of the Lehman Brothers collapse, but Begbies expects the figure to rise again as 2010 progresses."While business finance is expected to become more readily available during the first half of 2010, we anticipate a rise in the levels of financial distress during the second half of 2010, as temporary financial support measures are unwound," Ric Traynor, Begbies chairman said."Government support measures are providing welcome relief to the UK's struggling companies in the short term but they may exacerbate problems for some businesses as the need to repay debt catches up with them later in the year," he added.Begbies highlighted in particular the government's time-to-pay scheme, which has allowed over 240,000 businesses to defer £4.2bn in tax for between 3-6 months. When the scheme finishes there could be "a significant rise in company failures - most probably from the third quarter of 2010 onwards." The car sector was the worst affected with critical cases up 26% quarter-on-quarter. Engineers rose by 25% and retailers by 32%. Begbies also said a new trend was emerging for business failures to occur at a far earlier stage than in previous recessions.