Page last updated at 11:39 GMT, Monday, 27 April 2009 12:39 UK

More UK firms 'facing insolvency'

Construction companies are finding the recession particularly tough

There has been a sharp increase in the number of UK companies in all sectors of the economy that are facing serious difficulties, a survey has indicated.

Almost 90% more firms faced County Court Judgements of £5,000 or more, or wind-up petitions, in the first quarter of this year compared with a year ago.

Insolvency firm Begbies Traynor also said in its Red Flag Alert survey that the recession "continued unabated".

The survey monitors early warning signs of corporate stress in the UK.

It also found a 60% increase in the number of companies that faced court action, or had insolvent or out of date accounts.

'Critical problems'

The number of companies facing "critical problems" in the financial services, property services and construction sectors during the first three months of the year more than doubled compared with the first quarter last year, the survey said.

The total number of firms showing signs of stress rose to 84,648 in March this year from 53,240 a year ago, a rise of 59%, it found.

"Regrettably, experience tells us that company and personal insolvencies, like unemployment, are a lagging indicator, and are therefore likely to continue to rise through the recession," said Begbies chairman Ric Traynor.

However, the report added that while the recession continued unabated, there were "signs of a slowing of the pace of decline in some sectors".

For example, the IT and financial services sectors showed slight declines in the number of companies with critical problems compared with the final three months of last year.

In addition, the transport and communication sector and manufacturing both showed quarter-on-quarter increases of less than 5%.

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