Not a day passes without more reports of economic doom and gloom, present and future. And today’s no exception, with reports that Government spending cuts will create a 10% rise in business insolvencies this year.
A report by insolvency specialist, Begbies Traynor, shows that the number of firms with financial difficulties has risen year on year for the first time since 2009.
Around 148,000 firms experienced money problems in the three final months of 2010 – a rise of 4% on 2009 figures.
The firm forecasts that corporate insolvency figures will rise from 21,500 in 2010 to 23,500 in 2011. This is due to a combination of tightening of creditor attitudes and the Government’s spending cuts.
The company’s executive chairman, Begbies Traynor, said: ‘For smaller businesses, we are entering the darkest hour before dawn.
They face the dual challenges of weak domestic demand and greater pressures from larger competitors and business customers looking to preserve their own profitability.’
He added: ‘As such, it will be smaller businesses that bear the brunt of an increase in formal insolvencies.’