Accountancy firm Carter Backer Winter partner John Alexander says corporate insolvencies could rise by as much as a fifth this year.
He says the financial services sector will be vulnerable to increased insolvencies due to pressures such as increasing compliance costs, risk aversion among investors and low interest rates.
He says: “Businesses have to invest to generate more business and banks do not look like they are moving towards lending more money and making it easier. There will be a significant inc-rease in the number of insolv-encies as a result of this as comp anies will be strapped for cash.
I would not be surprised if there is a 20 per cent increase in corporate insolvencies.”
Alexander says firms have been cushioned by flexible tax arrangements with HM Revenue & Customs but warns that after the general election “the gloves will come off”.