Trade credit insurer Euler Hermes has revised upward its earlier prediction of an increase in U.S. business bankruptcies for 2007. The insurer’s research department now estimates a 51% rise over 2006 levels.
Although a "soft landing" is still expected for the economy, the following factors are anticipated to drive the increase:
- A slowdown in the economy;
- Lower corporate profits; and
- The end of the effect from the October 2005 bankruptcy amendments.
The result is expected to be an increase in business bankruptcies in the United States to the 30,000 level this year after a 50% year-over-year decrease from 2005 to 2006. Read the complete Euler Hermes Special Report for more details, including a discussion of their predictions for global insolvencies.