Business Digest February 2007

The number of companies falling into financial difficulty jumped by nearly a quarter last year, according to figures from Begbies Traynor.

To download a pdf version of this story with illustrative charts, click here.

The research found that 2,491 companies were the subject of winding-up petitions in 2006 – a 23% increase on 2005.

A closer analysis of the figures shows that businesses faced considerable pressure towards the end of the year.

In November and December 2006, the number of winding-up petitions going through the courts was over twice the average rate for the previous ten months.

Begbies Traynor said that part of the problem facing struggling companies could be a result of recent hikes in interest rates.

Begbies’ Ric Traynor said: ‘After a long period of stable interest rates and an expansion in the availability of external finance, the pressures on struggling UK businesses now seem to be mounting. There is an inexorable slide towards insolvency if the issues faced by those businesses are not addressed beyond simply borrowing more money and hoping for better times.’

The research said that the services sector was experiencing the most difficulties and contained the highest number of companies with critical problems.

The West Midlands was the region with the biggest increase in the number of troubled companies.