Insolvencies to leap due to public sector cuts

Tue, 27 Jul 2010

New research reveals that four out of five credit managers believe that public sector spending cuts will spark a sharp increase in business insolvencies within the next 12 months.

According to the survey by commercial credit reference agency Graydon UK, nearly two thirds (64%) of credit professionals anticipate that business failure rates will rise by more than 10% during the coming months, with 13% of those questioned forecasting that the insolvency hike will exceed 20% as public sector agency buying power is diminished.

Despite this stark warning, only 33% of the companies credit professionals represent are actively monitoring their customers’ reliance on public sector contracts as a source of revenue as an established part of their own supply chain risk management process.

Meanwhile, despite the looming prospect of a surge in company failures, just under half (49%) of credit managers questioned agree or strongly agree that a rise in business failures will be a price worth paying to restore the UK’s future economic stability.

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