Begbies Traynor, the UK’s leading insolvency company, today reveals that the number of UK companies experiencing “Critical Problems” in the second quarter of 2008 has increased substantially over the same period in 2007.

Overall, 4,258 companies faced ‘critical’ problems (those with CCJs totalling over £5,000 or Winding-Up Petition related actions) in the first quarter of 2008 compared with 542 as in the same period last year.  The research also showed conditions getting more difficult as the year progresses, with an increase in the number of companies facing critical problems of nearly 30 per cent in Q2 2008 compared to Q1 2008.

One of the worst affected industry sectors was financial services sector, where Q2 2008 has seen a 300 per cent increase in companies with the most severe difficulties over the same period last year, and a 36 per cent increase over the first quarter of the year.

The Q2 2008 statistics show substantial year on year increases in critical problems across all sectors, but construction (up 370 per cent on Q2 2007) and IT (up 371 per cent) showed the largest percentage increases followed by retail (up 335 per cent). On the positive side, the statistics show a fall in the rate of growth of appointments within the manufacturing, automotive and wholesale sectors in Q2 2008 compared to Q2 2007.

Begbies chairman Ric Traynor said: “In times of economic slowdown, you would expect the construction and retail sectors to suffer – and that is certainly borne out by our research.  However, the statistics also show that many other industry sectors are being affected. Credit lines have dried up and companies which might have been supported by extended credit up to a year ago are now at real risk.”

---