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800,000 start ups at risk from credit crunch

The credit crunch is already being blamed for declines in consumer spending, growing numbers of corporate liquidations and rising cases of commercial fraud, but leading credit management agency Graydon believe the business sector, and particularly the fast growing new business community in Britain, is the most likely to be adversely affected by the economic downturn in 2008.

According to Companies House statistics, new incorporations rose steeply during 2006/2007 to a rate of 449,000 a year. This figure represents a 20% increase over the corresponding 2005/2006 period. (372,000 new incorporations).

“It is a fact” argues Martin Williams, Managing Director of Graydon UK, “that the majority of businesses go to the wall in their first two years of trading. This tells me that the credit crunch has come along at exactly the wrong time for around 800,000 new businesses, which must be under even more financial pressure than usual to survive their first two years of existence”.

Williams adds “usually during the second year after start up, companies that struggle to survive run out of initial start up money, and rely on loans from banks to continue trading. In better economic times, many banks may agree to make funds available for longer, but when credit tightens, bank managers may react in a different way- by withdrawing financial support, or in the worst circumstances, using their powers to appoint an administrator if they hold security under any existing loan or overdraft agreement. I expect this to happen much more frequently during 2008.”

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For further information contact:

Tina Bennett
Weber Shandwick
Phone: 020 7067 0707

Graydon UK Limited
Phone: 020 8515 1400

Notes to Editors:

About Graydon UK
Graydon UK is one of the leading database information providers specialising in credit risk management. The company helps clients reduce the uncertainty of doing business by providing a complete, differentiated and high-quality package of credit risk management services. Graydon provides access to credit information and credit reports on companies in more than 130 countries worldwide. The Graydon group is owned by Atradius, Coface and Euler Hermes, three of Europe's leading credit insurance organisation.

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