UK firms struggle during Q4 claim Begbies

NEW data shows the number of UK firms struggling to stay in business jumped by 20% in the last three months of 2010.

According to the Red Flag Alert report by the accountancy firm Begbies Traynor nearly 148,000 companies had insolvent accounts, a court action against them or a winding-up petition, up from 123,361 in the third quarter.

Those companies described as “critical” by Begbies – issued either county court judgments or facing winding-up petitions, owed creditors more than £52.7bn.

Begbies’ chairman Ric Traynor said: “Today’s figures show that UK businesses are demonstrating real signs of distress and that trade creditors are both losing patience with their debtors and in need of collecting cash into their own businesses.  

“Coming against a backdrop of the largest decline in house prices for a year, higher inflation, an accelerated decline in business confidence, and higher unemployment forecasted for 2011, these figures indicate the renewed challenges facing businesses across most industries in 2011, particularly in the SME sector.”

The report shows companies that rely on public contracts struggled, with 61,000 becoming seriously indebted during the period. Overall, the number of distressed businesses was up 4% on the same period in 2009.