The UK Recession Continues Unabated According to Red Flag Alert

Some good news as quarter on quarter change in adverse signals is stabilising in some sectors

87% increase in companies with critical problems and 60% increase in companies with significant problems in Q1 2009 compared to Q1 2008
Financial Services, Property Services, and Construction sectors are all showing over 100% year on year increases in critical problems
Red Flag - Year on Year
Begbies Traynor, the UK’s leading business rescue, recovery and restructuring specialist, today
reveals that the UK’s recession continues unabated. This is according to the latest findings of its Red Flag A!ert system which monitors early warning signs of corporate stress. The statistics for the first quarter of 2009 show all sectors to be suffering from substantial growth of both Significant and Critical adverse actions, in comparison to the same period a year ago.

With regard to industry sectors the Red Flag statistics indicate that Property Services, Construction and Financial Services have been hardest hit when compared to Q1 2008. Other major sector casualties include Retail, Advertising, Automotive, Transport & Communications, and Manufacturing.

The total number of companies showing signs of stress (both significant and critical problems) has risen to 84,648 in March 2009 compared to 53,240 a year ago, an increase of 59%.

Red Flag - Quarter on Quarter
It is evident, however, from the latest results that the quarter on quarter rate of growth of adverse signals is slowing in some sectors.

IT and Financial Services both even show slight declines in the number of companies with critical problems compared to Q4 2008 and other sectors such as Print & Packaging, Manufacturing, Professional Services and Transport & Communications show increases of less than 5%.

Ric Traynor, Executive Chairman of Begbies Traynor Group, commented:
“The findings of our latest Red Flag Alert echo the findings of other recent surveys, showing as they do increasing business failures.

“The reduced rate of decline in quarter on quarter adverse actions is some good news; however, this is not the same as a recovery. Last week’s Budget tax increases and public spending cuts are unlikely to make life any easier for struggling companies.

“Regrettably experience tells us that company and personal insolvencies, like unemployment, are a lagging indicator, and are therefore likely to continue to rise through the recession."

www.redflagalert.com