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Monday, 24 January 2011

Business insolvencies predicted to increase

Begbies Traynor have published their Red Flag Alert that paints a decidedly gloomy picture for businesses going into 2011.  The report forecast a 10% rise in insolvencies in 2011, which would lead to 23,500 firms being affected.

Compared with the July to September quarter, there was an increase of 20% in the number of companies experiencing "significant" or "critical" financial problems according to the report.

This has been reflected in our enquiry levels.  However, the regional breakdown is of significant interest but Begbies Traynor are no longer publishing this data.  We are finding that Scotland is feeling the pressure at the moment.  This could be due to a whole host of reasons - More agressive creditors, actions of HMRC and perhaps the weather could have been the last straw. 

The role of the banks could come into the mix as it has been reported that the government's attempts to persuade banks to increase loans to small businesses is hitting trouble. The banks argue that lending targets for what might be weaker businesses could breach rules that say any decision should be in the best interest of shareholders.  Given that the shareholders are in many cases the tax payers, who are also likely to be affected by small business closures, then 2011 could be a very contentious time.

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