Business
Q3 2009 Red Flag Statistics
Q3 2009 Red Flag Statistics.
About this update from Btg Consulting Plc
[{"type":"text","content":"\n RNS Number : 0402B Begbies Traynor Group PLC 20 October 2009 \n \nPress release \n20th October 2009\nBEGBIES TRAYNOR SAYS THE WORST FOR INSOLVENCIES IS YET TO COME AS 134,000 UK COMPANIES SHOW MATERIAL SIGNS OF FINANCIAL DISTRESS IN Q3 2009\n\n\nRed Flag Alert is a monitor of early warning signs of company distress by Begbies Traynor, the UK's leading business rescue, recovery and restructuring specialist. The latest report focussing on Q3 2009 released today contains the following headlines:\n\n\nThe number of companies with significant and critical financial problems has fallen in absolute terms both year on year and quarter on quarter, principally reflecting the impact of HMRC's Business Payment Support Service, which has seen more than 215,000 companies defer payment of £3.79bn in tax liabilities \n\n\nThe fall in adverse actions against companies this quarter is, to some extent, symptomatic of increasing credit availability and growing business confidence, although adverse actions typically fall in this quarter as key sectors such as leisure enjoy their strongest quarter, and the holiday season both slows enforcement activity by creditors and eases cash flow pressures. This easing of corporate stress is reflected in the ICAEW's latest Business Confidence Monitor in which the Confidence Index has risen from -45.3 in Q1 to +4.8 in Q3, a level not seen since Q3 2007 \n\n\nEvidence is mounting that we maybe 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 \n\n\nStatistics from recessions over the past 40 years confirm that insolvencies peak between one and two years after GDP stops shrinking; scarce credit after this recession may intensify this effect, causing a substantial rise in insolvencies during 2010 and into 2011 \n\n\nSectors most impacted by adverse actions in Q3 2009 were Engineering and Recruitment, with Critical actions up 31% and 12% respectively on last year. Engineering companies form a large part of supply chains to major manufacturing operations&nb...