Corporate insolvencies set to rise

The burden of red tape and flagging consumer confidence levels are set to
cause a significant rise in corporate insolvencies over the next 12 months, a
new survey has found.

Research published by the business recovery practice at
PricewaterhouseCoopers has found that more than half of UK mid market businesses
expect company insolvencies to rise next year.

Manufacturers are especially gloomy about their sector’s prospects, with
three quarters predicting a growth in business failures.

The analysis of business attitudes revealed that complying with regulation is
regarded as the number one threat to the financial stability of UK plc.

Three out of 10 businesses see regulation as being a major financial risk
followed closely by consumer confidence levels. Surprisingly, given the level of
company pension deficits, less than five per cent of UK businesses regard the
cost of meeting pension obligations as a major threat.

The amount of corporate debt was also seen as a serious problem, with nearly
one in five companies regarding their current debt levels as the biggest threat
to their survival.

Colin Haig, partner in the business recovery services team at
PricewaterhouseCoopers, said: ‘Rising levels of corporate debt and record low
levels of consumer spending are twin perils facing struggling British business.
We are seeing lots of companies who are already showing signs of distress
looking nervously at rising raw material prices, and the cost of increased

‘The impact of the new Pension Protection Fund levy has yet to make it in on
to company radar screens but it could be a ‘double whammy’ for businesses that
are already in difficulty. Companies who are already cash strapped should start
planning now so that they are well placed to deal with the levy when it

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