Euler Hermes: Prepare a mass grave for bankrupt firms
A deluge of firms is set to go bankrupt as the year progresses, according to research published this week by Euler Hermes.
The credit insurer forecasts a global surge in insolvencies of 35% for 2009, with the financial crisis transforming global markets into a “burial ground” for businesses.
Figures for the first quarter make gloomy reading, with insolvencies in the UK up 40% on year.
Countries across Europe also fared badly, with first quarter insolvencies up 30% on year in Portugal, 20% in Belgium, and 15% in France, Austria, and Switzerland.
Finance and construction have already taken their worst hit from the economic meltdown, Euler Hermes said.
Next to topple will be the industrial sector, followed by retail, wholesale, and transport.
“In the current recessionary economic environment, we will witness a sharp worsening of the insolvency trend everywhere in the world, at least up to the end of 2009,” said Karine Berger, Euler Hermes head of research.
“For numbers of businesses that have drawn heavily on available cash in order to outlast the shock of the last three quarters, it only needs a few more months of empty order books or failing sales to send them on their way to insolvency,” she added.
Euler Hermes prediction for the long term is equally gloomy.
“The economic gods will remain hungry for sacrifice for quite some time,” its report warned.
Berger reiterated this analysis: “The very light winds of recovery we anticipate will not save many more businesses in 2010 than they will in 2009.”
Category: Financials, Insurance News
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