Signs of more gloom for the UK economy have emerged in a survey from Denton Hall, which found that three quarters of UK businesses expect the Asian economic crisis to have a "marked and damaging effect" on the economy within nine months.
The downturn will be coupled with a reduction in inward investment into the UK, according to respondents. The continuing strength of sterling, together with cheaper imports and falling demand for UK exports to the Asia Pacific region will only make the situation worse, they said.
Howard Morris, insolvency partner at Denton Hall, said that concerns about the Asian meltdown were unsurprising. "It is clear that a number of Japanese, Korean, and other Asian companies are cutting their continental European presence, and some their UK presence. The trend is one of retrenchment."
The survey was conducted among City fund managers, bankers, venture capitalists and company directors.
Apart from Asia, questions focused on issues surrounding insolvency law and practice. It drew some surprisingly strong views. For instance, on the issue of directors' accountability, 50 per cent said that current law fails to sufficiently penalise executive directors who trade while insolvent - a vote of no confidence in current Department of Trade and Industry powers.
Only a minority - 6 per cent - strongly felt penalties were sufficient, and many felt the law relating to directors was not enforced enough.
Yet conversely, the threat of personal liability for wrongful trading actually prevents directors from orchestrating a proper rescue of their failing company, according to 31 per cent of respondents.
Employees' rights, under law relating to the transfer of a business, can also prevent a company rescue, according to 56 per cent of respondents, against 30 per cent who disagreed. However, many recognised that insolvency law must work alongside public policy to maintain jobs.
Banks came under attack, with 62.5 per cent believing that they and other secured lenders resort to receivership too quickly. And 56 per cent said that lack of support from banks was a major obstacle to a successful rescue. This was topped only by poor management (81 per cent) - which also rated as the prime reason for company failure.