Firms with 'critical problems' up 370pc

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Nearly five times as many construction companies are facing the threat of insolvency compared to last year, according to research from business recovery specialist Begbies Traynor.

Around 4,258 companies across sectors faced 'critical' problems – such as experiencing County Court Judgements over £5,000 or winding-up petition related actions – in the first quarter of 2008 compared with 542 for the same period last year.

Construction is one of the worst affected sectors with a 370 per cent increase in firms with the most severe difficulties for Q2 compared to last year. The first quarter of the year showed a 13 per cent increase.

Overall statistics for the second quarter of 2008 show substantial year-on-year increases in critical problems across all sectors, but construction and IT showed the largest percentage increases followed by retail, up 335 per cent.
 
Begbies Traynor Group executive 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 by the current conditions, and the gloom is certainly not restricted to those areas. 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."