Page last updated at 06:24 GMT, Tuesday, 20 October 2009 07:24 UK

Firms 'facing more insolvencies'

Engineering worker - generic
The report said engineering had suffered the most in the third quarter

More UK companies face the threat of insolvency next year, a report says, even though the number of firms failing has fallen in the past three months.

Insolvency firm Begbies Traynor said 134,000 businesses still showed "material signs of distress".

It also said there was evidence that the UK is in the mid-point of a W-shaped recession.

It said the 1980s recession also saw a temporary rise in business confidence before rapidly deteriorating in 1982.

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

Begbies Traynor said engineering and recruitment had been the sectors "most impacted by adverse actions" in the quarter.

The number of companies that failed in the July to September quarter fell to 149,543 - down 14% on the same period a year ago.

"The third quarter Red Flag Alert statistics demonstrate that the UK may be in the eye of the storm," said Ric Traynor, chairman of Begbies Traynor Group.

"The well-intentioned government efforts to prop up struggling companies may provide a necessary lifeline in the short-term, but will ultimately prove futile in many cases."

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