Business failures to reach 10-year high
Fear of war and lack of customer confidence are among the factors that will cause 70,000 businesses to fold in the next three years, predicts BDO Stoy Hayward.
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The firm warns that by 2005 annual business failures will grow to 25,000, meaning the UK returns to a failure level it has not seen since 1993. This is up from 19,928 failed businesses in 2002, as published today in BDO’s Industry Watch report.
BDO blames consumer confidence dips, fears about the threat of war and a ‘sluggish’ UK GDP for a steady increase in the coming three years in company failures.
‘In many industries we are now seeing the full impact of the economic slowdown that started three years ago. Consumer wealth is under attack from several directions. Fear of a housing slump, stock market falls, pensions uncertainty, national insurance rises, job insecurity and worries about war will curb consumer spending,’ said Shay Bannon, business recovery partner at BDO.
‘But it is the failure among senior management to appreciate the business’s working capital requirements and financial position that ultimately exposes them to risk. It’s important that management teams learn to spot the signs that their business may be in trouble and don’t bury their heads in the sand. The chances of survival can be greatly increased through seeking advice and implementing a rescue plan before it’s too late,’ he added.