Accountants Predict UK Business Failures To Reach Record High

Thu, 02 Jul 2009

Tens of thousands of UK businesses will go bust this year as a result of rising unemployment and falling consumer spending, according to a new study by accountants and business advisors BDO Stoy Hayward .

The firm’s Industry Watch report predicts that a record 36,200 businesses will go bankrupt this year and the number will continue to rise to 40,400 in 2010.

According to the report, consumer spending is likely to fall by 4 per cent this year as employment in the UK drops 3.5 per cent, threatening sectors which are most reliant on disposable income, including retail, leisure and personal services.

It added that government action aimed at boosting the economy, including low interest rates and a bank rescue plan, is not likely to halt the rate of business failures until at least 2011.

Shay Bannon, head of business restructuring at BDO Stoy Hayward, said: "Business failures in Britain are rising unabated as the fallout of the economic downturn becomes ever clearer."

"Consumer spending is set for a steep contraction in 2009 and households will continue to be hit by rising unemployment, weaker earnings growth and reduced perceived wealth levels due to declining asset prices."

She added that business failures in the personal services sector "are forecast to increase by 55.9 cent this year to 1,910 as consumers tighten their belts".
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