Half of UK businesses expect insolvencies to rise

More than half of UK mid-market businesses expect company insolvencies to rise over the next 12 months, reveals research published by PricewaterhouseCoopers.

Less than one in seven businesses believe that insolvencies will actually fall in the next year.

The analysis of business attitudes conducted by the Business Recovery practice at PwC also reveals that complying with regulation is regarded as the number one threat to the financial stability of British business. 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 5% of UK businesses regard the cost of meeting pension obligations as a major threat.

The amount of corporate debt is also seen as a significant problem for the financial health of UK plc. Nearly one in five companies regard their current debt levels as the biggest threat to their survival.

Colin Haig, partner in the business recovery services team at PwC, says: “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 regulation.

“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 arrives.”