Insolvency Scare

 

Britain could be at risk for a second wave of insolvencies next year once tax rises and spending cuts settle in reports have warned. Approximately 52,000 companies are in financial distress in sectors most dependent on public sector funding Begbies Traynor; insolvent specialist predict. The study suggests that despite the number of overall companies falling into financial trouble is declining, this will reverse and levels are expected to increase again at the beginning of 2011.

More than 127,000 firms were experiencing problems with finance inn the 3 months to the end of June which is down 21% on the previous quarter and 31% lower year on year. However average debts of distressed companies soared 60% to about £545,000 suggesting larger companies are also experiencing difficulties.