Insolvency in SMEs could hit 42%

The number of small to medium enterprises (SMEs) going insolvent could hit 42% by the end of next year, according to experts.

An investigation by R3, the trade body for insolvency, revealed that company bankruptcies are set to surge on the back of the economic downturn.

The study by R3 - based on a poll of over 2,000 SMEs - suggests that insolvency rates could hit levels not seen since the 1992 recession.

President of R3, Nick O'Reilly, said: "The battle for credit has been lost and there is no way out of what is coming."

"Businesses and individuals will now have to face up to today's tougher climate and seek professional advice as early as possible."

He added that one of the major problems SMEs were experiencing was an absence of bank funding.

Research published by World First foreign exchange experts last week claimed that SMEs lost £900 million on the currency markets every year.