Insolvency threat ‘will continue despite positive signs’

Posted 05/02/2010

An expert has warned that recent positive economic indicators should not mask the continuing threat of insolvency faced by many companies.

Mike Jervis, business recovery partner at PricewaterhouseCoopers (PwC), told Accountancy Age that companies should expect a spike in corporate failures in the coming months as the UK exits recession.

The expert revealed that PwC insolvency estimates have been relatively positive in recent times, due to the increased ability of firms to manage with more limited means.

However, he said this good news is tempered by historical evidence that business failures tend to increase in the immediate aftermath of an economic downturn.

Mr Jervis added: “Now is not the time for companies to breathe easy – we are not at the end of the tunnel yet.”

Last month, insolvency trade body R3 published the results of a survey which showed that 61 per cent of UK companies do not feel optimistic about their prospects for the first quarter of 2010.