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Stricken company numbers on the rise

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Insolvency specialist Begbies Traynor says 140,000 companies fell into financial difficulties during the final quarter of 2009 – the same period when Britain is thought to have return to positive economic growth.

The figure was six per cent higher than the previous three month block, even though the economy shrunk 0.3 per cent between July and September. Researchers further warned that firms were folding sooner once they started experiencing problems.

"Experience of the last four recessions tells us that unemployment levels and corporate and personal insolvencies have lagged behind technical recession by one to two years,” cautioned Ric Traynor, executive chairman of Begbies.

“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."

"While business finance is expected to become more readily available during the first half of 2010, we anticipate a rise in the levels of financial distress during the second half of 2010, as temporary financial support measures are unwound."

Begbies added that political efforts to support British firms were having an positive impact overall but that this would be reversed as temporary tax breaks and incentives were stripped away. 

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