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U.K. Corporate Bankruptcies Predicted to Fall 3% in 2007, According to Global Insight
Outlook for IT, Media, and Telecommunications Remains Positive

WALTHAM, MA, 14 March 2007 — Global Insight, the world's leading company for economic and financial analysis and forecasting, announced today that U.K. corporate bankruptcies are expected to fall 3% in 2007, after rising 1% in 2006. Higher interest rates and a strong currency will increase pressure in 2007, but are not expected to have a significant effect on the health of most U.K. companies.

Among sectors in the economy, the information technology and telecommunications sectors will benefit from strong demand and new products. The U.K. telecommunications market, as well as computer services, education, and commercial research and development, are also likely to see better risk profiles in 2007.

Unlike many economies in the European Union, the British economy is consumer-led. Consumer spending rose sharply from 2001 to 2004, the early years of this cycle, but decelerated during 2005 and 2006, as higher interest rates, higher levels of consumer debt, and rising non-discretionary costs have put pressure on purchasing power. Profitability risk ratings for 2007 are higher for U.K. retail trade, leisure, and consumer durables producers. The outlook for health and public services is also good, and the risk ratings for the educational services, health, and recreational sectors should improve their already-low risk profile.

Other sectors with relatively low risk ratings are financial companies, insurance companies, and property firms, but these sectors will see deterioration in their credit quality this year. In particular, U.K. banks may suffer another year of high bad debt charges arising from their consumer loans and credit card businesses.

The construction sector is especially prone to financial failure, as many companies are small and poorly capitalized; larger companies are subject to the project risks of cost overruns. Residential construction in the United Kingdom may slow in 2007, as high property prices and rising interest rates discourage house buyers, while business and public-sector demand for construction is expected to hold up. Total U.K. construction output has risen steadily since 2000, and more infrastructure projects are in the pipeline, with work already started in preparation for the 2012 Olympics. The risk ratings for the construction and real estate sectors increase slightly for 2007, but remain below average.

Global Insight's Sector Risk Ratings are produced as part of our World Industry Service and are updated quarterly. These risk ratings are designed to assist credit analysts and asset managers in identifying the best prospects for movements in sector credit quality on a comparable basis across industries and countries. For more information, please visit http://www.globalinsight.com/corpbankruptcies.

Mark Killion, CFA, MD World Industry Sve, Global Insight
+ 610 490.2547 (mark.killion@globalinsight.com)

Geoffrey Skipper, Prod. Mgr, Global Insight (Internl)
+ 44 (0) 20-7452-5626 (geoffrey.skipper@globalinsight.com)

Catarina Walsh, Media Relations, Global Insight (Internl)
+ 44 (0) 20-7452-5183 (catarina.walsh@globalinsight.com)

About Global Insight:
Global Insight, Inc. (http://www.globalinsight.com/) is a privately held company that brought together the two most respected economic information companies in the world, DRI and WEFA. Global Insight provides the most comprehensive economic and financial information available on countries, regions and industries, using a unique combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through the world's first same-day analysis and risk assessment service, Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. The company has over 3,800 clients in industry, finance, and government with revenues in excess of $95 million, over 600 employees and 23 offices in 13 countries covering North and South America, Europe, Africa, the Middle East, and Asia.

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