The number of British companies in financial distress rose by 6 per cent in the last three months of 2009, to 140,000, raising fears the worst effects of the recession are yet to come.
A leading insolvency specialist that produced the figures, warned that although these numbers were better than at the peak of the credit crisis after Lehman Brothers, the US investment bank, collapsed in September 2008, they would probably worsen again by the end of this year
Unemployment levels, currently at 2.49 million in the UK, and corporate and personal insolvencies generally lag technical recessions by one to two years, the firm said.
But, in this case the company bloodbath is likely to worsen once a Government scheme to delay making tax demands for troubled companies runs out.
HMRC remains one of the principal creditors in many insolvencies and we fear that when the current "time-to-pay" scheme, which provided a lifeline to many businesses, is finished there will be a significant rise in company failures - most probably from the third quarter of 2010 onwards.
Government support measures are providing welcome relief to the UK's struggling companies in the short term but they may exacerbate problems for some businesses as the need to repay debt catches up with them later in the year.
