2010 will continue to be very tough for recession-hit firms, with construction companies particularly vulnerable to the expected end of HM Revenue & Customs’ “time to pay” support service.
The construction and public sector are among those most at risk in the year ahead, said insolvency firm Begbies Traynor.
Withdrawal of Government support measures, coupled with a lack of preparation and finance for a predicted upswing in business will hit firms, said the group.
The number of companies with significant or critical problems in the fourth quarter of 2009 fell 14% on a year earlier, marking Begbies’ “Red Flag Alert” report’s first year-on-year decline since the recession began.
Begbies warned of a significant relapse in the third quarter of 2010 as companies face the recovery.
More than 140,000 companies fell into financial trouble in the last quarter of 2009 and the latest “Red Flag Alert” report showed a 6% hike in firms undergoing financial distress between the third and fourth quarters.
“With tax and interest rates certain to rise, as well as increasing pressure on consumer spending, there is every reason to suggest that the insolvency peaks of this recession remain some way off,” said Ric Traynor, executive chairman.