A BROMSGROVE insolvency expert claims debt has become a "dirty word" since the US terrorist attacks of September 11.

"With confidence crumbling and share price volatility, debt has become a dirty word again," said Alan Haden, of Haden Insolvency, adding that, until recently, company borrowing had been "simply another item on the checklist".

"But following the vile deeds of September 11, borrowing is a dirty word and everyone is running scared, with businesses falling over themselves to reduce their borrowings and calm fears," he said.

He said the "marked slowing" of the economy since September 11 was coupled with falls in asset prices, which had resulted in corporate gearing ratios being "significantly higher".

"The consequences are now all too familiar," he continued.

"Jobs are being lost at an unprecedented rate, especially in the telecom, leisure, airline, hotel and travel sectors, and manufacturing continues in the doldrums."

He said some companies had seen business fall off "by as much as half" in the past month.

However, low interest rates meant the cost of carrying debt was much lower than in previous downturns which, in turn, meant banks could afford to "support the fragile for longer".

He said the willingness of banks to support and guide debt-laden companies was "pivotal" to avoiding the "worst case scenario".

"A surge in bad debts will almost certainly lead to a credit crisis as banks are forced to tighten their lending criteria," he said.