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Pastimes : The Hot Button Questions:- Money, Banks, & the Economy

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From: maceng2	10/20/2009 5:23:09 PM
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Businesses “in the eye of the storm” 08:35 October 20th, 2009 smallbusiness.uk.reuters.com LONDON, Oct 20 (Reuters) – Restructuring specialist Begbies Traynor on Tuesday forecast that the worst is yet to come for insolvencies in the UK, saying 134,000 companies had shown signs of financial distress in the third quarter. The insolvency specialist said evidence is mounting that Britain may be at the mid-point of a ‘W’ shaped recession, with a deluge of business failures likely in 2010. “Similarities can be drawn with the recession of the early 1980s which also saw a temporary rise in business confidence in 1981 before rapidly deteriorating in 1982,” Begbies said in its ‘Red Flag Alert’ report which monitors struggling companies. Begbies said statistics from recessions over the past 40 years show insolvencies peak between one and two years after gross domestic product starts shrinking. It added that a lack of available credit may intensify the effect after this recession, causing a substantial rise in insolvencies during 2010 and into 2011. Executive Chairman Ric Traynor, who co-founded the business in 1989, said Britain “may be in the eye of the storm”. “The well-intentioned government efforts to prop up struggling companies may provide a necessary lifeline in the short-term but will ultimately prove futile in many cases,” Traynor said. Begbies said the worst-hit sectors in the third quarter were engineering and recruitment.

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