British business failures are set to rise in the second half of 2010 as Government and central bank support measures are unwound, the corporate distress specialist Begbies Traynor has warned.

It said that Government help had provided companies with “welcome relief” during the recession but despite the support more than 140,000 experienced “significant and critical” financial problems in the fourth quarter of 2009. That was 6pc more than the third quarter, and 14pc fewer than in the same period in 2008, the report said.

Ric Traynor, executive chairman of Begbies Traynor Group said the situation was likely to worsen later in the year: “With tax and interest rates certain to rise, as well as increasing pressure on consumer spending, there is every reason to suggest that the insolvency peaks of this recession remain some way off,” he said.

“While business finance is expected to become more readily available during the first half of 2010, we anticipate a rise in the levels of financial distress during the second half of 2010, as temporary financial support measures are unwound.”

Despite the extension to the car scrappage scheme, the automotive sector experienced the largest rise in critical problems in the fourth quarter, up 26pc compared with the third. On the other hand the retail sector saw a 32pc decline in critical actions as the temporary VAT cut and improved consumer confidence resulted in a rise in sales over Christmas, the report said.

Begbies Traynor warned that while conditions in the construction sector had improved in the fourth quarter, it remained particularly vulnerable to the removal of Government support. More broadly it said that companies reliant on the public sector as a customer would also be vulnerable as spending cuts are introduced after the next general election.

“Government support measures are providing welcome relief to the UK’s struggling companies in the short term but they may exacerbate problems for some businesses as the need to repay debt catches up with them later in the year,” said Mr Traynor.

On a regional basis, Scotland was the only area in the fourth quarter where companies experiencing significant financial problems increased compared with a year earlier, up 2pc. The south east and east Anglia fared the best, with an 18pc reduction.

http://www.workfromhomeinuk.com/

http://www.telegraph.co.uk/finance/financetopics/recession/

Commercial property values rose by 3pc in December, the highest monthly gain since records began, according to the IPD.

The final month of last year delivered the largest monthly capital growth in IPD’s 23-year history, at 3pc, according to December’s IPD UK Monthly Index.

The figure beats the 2.9pc delivered exactly 16 years earlier in December 1993, at the end of the last major property recession.

The fifth-consecutive monthly gain, which amounted to a compounded growth of 8.8pc, was sufficient to lift returns on UK commercial property into positive territory for the calendar year. In the first IPD indication of the year, UK commercial property annual total returns for 2009 were 2.2pc, while capital growth was -5.6pc.

At the sector level, the most recession-sensitive sector, offices, began its recovery latest. Capital values fell by 14pc over the first eight months of the year but then recovered – the sector was down 8.4pc over the 12 moths. In the retail sector, over the first six months of 2009 capital growth also fell by 14pc but ended the year down by just 4.3pc.

The Industrial sector’s initial capital depreciation last year was the shallowest, at minus 11pc over the seven months to July, before a compounded 7.3pc capital growth over the final five months to end the year at minus 4.5pc.

Investors have been returning to the sector in recent months off the back of the sector’s recovery.

Aviva has just raised more than £200m for its UK Real Estate Recovery Fund, which will invest in British commercial real estate over a five-year period.

Since the fund’s launch at end-November 2009, it has bought three properties, with two more due to be acquired soon, adding up to about £50m in investments so far, the company said in a statement.

“The fund’s strategy is to acquire lower-risk assets that are let to strong covenants on long leases in sectors and sub-sectors that we forecast to be top performers,” said fund manager Rob Walton.

http://www.telegraph.co.uk/finance/personalfinance/investing/

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