More businesses are likely to fall into difficulty this year as the emergency relief measures introduced in response to the economic crisis come to an end.

The latest Red Flag report from business rescue, recovery and restructuring specialists Begbies Traynor warns that the second half of 2010 could see a major surge in the number of companies in trouble.

Red Flag Alert is a monitor of early warning signs of company distress.

In the West Midlands, there were 12,628 companies facing significant problems in the fourth quarter of 2009, 12 per cent more than in the third quarter but seven per cent fewer than a year ago.

There were 342 facing critical problems, compared with 376 in the third quarter and 401 last year.

Nationally, more than 140,000 companies experienced significant or critical problems in the fourth quarter of 2009, six per cent more than in the third quarter, but 14 per cent fewer than in the same period in 2008.

Companies with significant problems face either a court action and/or average, poor, very poor, insolvent or out of date accounts.

Critical problems include county court judgments totaling £5,000 or more and/or actions related to winding-up petitions.

The report says a more lenient approach by creditors has helped matters, compared with the near panic to preserve cash and recover debts of a year ago. However, it warns: "HM Revenue & Customs remains one of the principal creditors in many insolvencies and we fear that when the current time-to-pay scheme, which provided a lifeline to many businesses, is finished there will be a significant rise in company failures - most probably from the third quarter of 2010."

James Martin, a partner at Begbies Traynor inBirmingham, said: "We should not be deceived by the latest numbers, which look broadly flat; there is more pain to come as debts catch up with struggling companies.

"Government support measures are providing welcome relief in the short term, but they may be storing up  problems for some businesses as they will need to pay up later in the year.

"Experience of the last four recessions tells us that unemployment levels and corporate and personal insolvencies have lagged behind technical recession by up to two years. With tax and interest rates certain to rise, as well as increasing pressure on consumer spending, there is every reason to suggest that the insolvency peaks of this recession remain some way off.

"While business finance is expected to become more readily available during the first half of 2010 we anticipate a rise in the levels of financial distress during the second half, as temporary financial support measures are unwound."