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Industry body confirms insolvency lag effect

Published on 20 Jan 2010 under category: legal

A "lag effect" in the number of businesses declared insolvent is likely, the CBI confirmed.

The Red Flag Alert report by Begbies Traynor yesterday forecast there will be a two-year "lag effect" of insolvencies once short-term government measures to help struggling businesses end.

Government initiatives such as the HMRC's 'time-to-pay' scheme have been cited as potential causes of the predicted delay.

Matthew Fell, director of corporate affairs at the Confederation of British Industry (CBI) confirmed the findings: "That does feel about right to us. We have yet to see the impact of the various support schemes that the government have put in place.

"They either are in the process [of being removed] or will eventually have to be wound down. The outlook is still pretty bumpy, and there will be more failures on the way.

"So we do recognise that lag effect, albeit against the backdrop of the economy overall beginning to pick up, potentially from midway through this year."

If you require advice on Insolvency and Bankruptcy please call us on +44 (0) 20 7831 0101 and ask for Katherine Sillett.