FINANCE experts are warning that fraud levels will rise as the recession continues to tighten its grip on the UK economy.

The message from insolvency trade body R3 comes on the same day that the British Retail Consortium (BRC) announced the lowest levels of consumer confidence since the survey began in 2004.

R3 North West chair Matt Dunham said a poll of R3 members showed almost 40% have seen a rise in corporate fraud cases in the past six months and 33% reported an increase in personal fraud.

He said: “In a recession, desperate people seek desperate measures. Members are reporting cases where people who have taken a pay cut try to supplement their income by ‘putting their hand in the till’.”

“Companies try over-invoicing, and people avoid paying taxes thinking they won’t get caught. Then, often when bankruptcy nears, people try and transfer assets to keep them out of the insolvency.”

The survey also revealed that insolvency practitioners believe corporate insolvencies in England and Wales will rise by 31% to about 29,000 for the year, and personal insolvencies will also grow by 31% to around 139,000.

Today’s BRC update showed confidence among Britain’s consumers has dived by nine points to 65 since last October – in spring 2006 it stood at 101 points.

The fall has been directly driven by mounting uncertainty about jobs with 86% of people feeling ‘negatively’ about their job prospects for the next year.

Furthermore, 49% of people felt their personal finances would be ‘not so good’ or ‘bad’ (17%) in the coming months.

BRC director general Stephen Robertson said: “This survey suggests the economy’s climb back to growth will be harder and slower than the government claims.

“Only 13% of people believe we’ll be out of the recession by this time next year. Six months ago nearly one in five thought the recession would be over by this Christmas. Clearly most people don’t share the Chancellor’s optimism.”

However, in contrast high street giant John Lewis reported better trading in the week ended May 2.

The chain, which opened a flagship store in Liverpool One last year, reported an improved performance compared with recent weeks, particularly on Saturday, despite the good weather. Online trading recorded sales growth of 7.4%.