Businesses ‘lacking confidence over insolvency risk’

Posted 22/01/2010

UK companies are pessimistic about their prospects during early 2010 due to the increasing risk posed by insolvency, according to new research.

Statistics published by insolvency trade body R3 have revealed that 61 per cent of businesses do not feel that the economic outlook for the first quarter of the year is positive.

However, R3 president Peter Sargent pointed out that even this is more optimistic than the outlook of experts on business failure, of whom 92 per cent are taking a negative view of business prospects in the January to March period.

Mr Sargent stated that this is because the country’s economy is still in the early stages of recovery, which can be “a dangerous time for businesses”.

He added: “Insolvency practitioners know that creditors tend to act more aggressively as we come out of a recession and corporate insolvencies continue to rise.”

This echoes the advice of the Confederation of British Industry, which predicted that business failures are to increase in 2010 as a result of tax increases on companies and consumers.