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September 1st, 2008

Darling’s future in doubt

Chancellor Alistair Darling’s future is said to be under severe scrutiny after a controversial interview in the Guardian over the weekend.

Darling said that Britain was facing, “arguably the worst” economic downturn in 60 years and that it would be, “more profound and long-lasting” than people expected.

In the interview the Chancellor claimed that the government was unlikely to change their policies in responce to the current ecomic situation, an assertion that has been rejected by Whitehall Insiders.

Darling has since tried to retract his statements, allegedly at the insistence of Prime Minister Gordon Brown. The Chancellor has claimed that he was talking about world conditions rather than Britain in particular.

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July 23rd, 2008

Financial services companies with “critical problems” increase by 300 per cent

Begbies Traynor, the business rescue, recovery and restructuring specialist, has revealed that the number of UK companies experiencing “Critical Problems” in the second quarter of 2008 has increased substantially over the same period in 2007. Overall, 4,258 companies faced ‘critical’ problems (those with CCJs totalling over £5,000 or Winding-Up Petition related actions) in the first quarter of 2008 compared with 542 as in the same period last year. The research also showed conditions getting more difficult as the year progresses, with an increase in the number of companies facing critical problems of nearly 30 per cent in Q2 2008 compared to Q1 2008.

One of the worst affected industry sectors was the Financial Services sector

r, where Q2 2008 has seen a 300 per cent increase in companies with the most severe difficulties over the same period last year, and a 36 per cent increase over the first quarter of the year (see tables below).

The Q2 2008 statistics show substantial year on year increases in critical problems across all sectors, but Construction (up 370 per cent on Q2 2007) and IT (up 371 per cent) showed the largest percentage increases followed by Retail (up 335 per cent). On the positive side, the statistics show a fall in the rate of growth of appointments within the manufacturing, automotive and wholesale sectors in Q2 2008 compared to Q2 2007.

Additional analysis of the trends in the first half of the year show the Property Services sector (up 20 per cent) as also suffering. Pressure did ease slightly in Q2 2008 in certain sectors, including engineering and automotive industries which, although the overall numbers were higher, the rate of increase had slowed in actions received over the first quarter of the year.

Ric Traynor, Executive Chairman of Begbies Traynor Group, commented, “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, like Financial Services, 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.”

The quarterly ‘Begbies Traynor Red Flag A!ert’ Statistics for the second quarter of 2008 monitors adverse actions and other corporate distress signals. Based on previous Begbies Traynor research, approximately 15 per cent of the companies experiencing the most difficult of circumstances, categorised by Red Flag as those with ‘Critical Problems’, will enter into a formal insolvency procedure within 12 months.

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March 7th, 2008

Minimum wage to rise by 3.8%

Britain’s minimum wage is set to rise by 3.8 per cent from October 2008, in line with the increase in average earnings but below prevailing retail price inflation.

Business leaders had been worried that a rise above inflation would cost jobs in sectors such as hotels, catering and retail.

The increase means that the adult minimum wage will rise from £5.52 to £5.73 an hour.

Since its introduction in April 1999, the UK’s adult minimum wage rate has risen by 59 per cent, more than twice the increase in the retail price index over the same period, and is the third highest out of 20 EU nations.

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