UK insolvency rates will rise, says CBI

Posted 20/01/2010

The Confederation of British Industry (CBI) has backed recent forecasts suggesting that UK businesses are to face an increasing risk of insolvency over the coming months.

Matthew Fell, director of corporate affairs at the CBI, said that forthcoming tax increases on both companies and consumers will pose a “twin threat” to firms already struggling because of the recession.

The warning comes in response to a recent report by Begbies Traynor which suggested that 140,000 businesses in the UK were in “critical” financial difficulties in the last quarter of 2009.

Mr Fell described these findings as unsurprising given the testing economic climate, adding that the CBI is predicting a “sluggish” rate of recovery for the rest of the year.

He added that businesses which rely on public sector markets for a portion of their income may also be badly affected by spending cuts in this area.

“The outlook is still pretty bumpy and there will be more failures on the way,” Mr Fell said.