Companies to go bust at rate of 400-a-week
More than 63,000 businesses will fold by 2006 due to the slowdown in consumer spending, insolvency practitioners have predicted.
Link: Insolvency firms find work in retail sector
In its forward-looking insolvency index, BDO Stoy Hayward predicts 419 companies will go bust each week over the next three years.
The firm’s industry watch also revealed business failures rose by 6% last year with 19,928 companies folding in 2002 – 383 every week. Less than 14% of these involved a rescue plan.
The economy’s most vulnerable sector in the study was wholesale, with failures rising by 47% in the fourth quarter of 2002 compared to the same period last year. The travel and transport sector followed, as BDO predicted a 35% increase in businesses going to the wall.
The short term business failures would come as a result of a slowdown in consumer spending and a decrease in GDP growth, according to BDO.
BDO partner Shay Bannon, business recovery services, said: ‘This quarter, we are seeing the true impact of the consumer spending slowdown on UK companies.
‘With hundreds of firms set to collapse, business managers and owners must avoid burying their heads in the sand, and wise up to the early warning signals that indicate problems.’