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Small business 'has not seen the worst' of the credit crunch

May 02 2008

Continuing market volatility caused by the credit crunch could cause an increase in the number of businesses becomming insolvent, according to a business expert.

Head of corporate restructuring at Ernst & Young warned BBC Five Live's Wake Up to Money that more companies are set to suffer financial woes as a result of the crisis.

'To be honest I don't think we have seen the worse of it yet and I think currently it is a little bit of the calm before the storm,' Bingham commented, adding that at the time of the dot-com crash it was one sector that was affected whereas this time there will be problems 'across the board'.

Following a downturn in the business to consumer market, the business-to-business sector is now beginning to suffer, she told the programme.

She warned that without the cash reserves of larger firms, smaller businesses are likely to feel the crunch more keenly.

Figures from the Insolvency Service have shown that the number of company liquidations rose by two per cent during the first quarter of the year.

The figure of 3,210 liquidations is four per cent higher than the number of liquidations which took place in the first quarter of 2007.

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