Business failure slowdown is bucking trend: BDO

The number of company collapses slowed down well before economic output
stabilised during the recession, to the surprise of insolvency experts at BDO

Business failures peaked in the first quarter of 2009 and then started to
drop while the economic outlook still showed no signs of improving.

Shay Bannon, head of business restructuring at the UK’s sixth largest firm,

said: “Usually there is a strong correlation between economic output and
business failures, but during the 08/09 recession that relationship seems to
have been weakened. Surprisingly, businesses have held up better than the
economic decline would have suggested.”

Bannon also expressed surprise at seeing business failures rise far less than
expectations through the latest recession and also less sharply than during
previous recessions.

Traditionally insolvencies continue to rise after an upturn in the economy,
but business failures have bucked the trend at the tail end of this recession.

However, the total number of business failures reached 26,165 in 2009 an
increase of 16 per cent compared to 2008 and up by 59 per cent compared to
pre–recession levels in 2007, signifying the perilous climate businesses in
which businesses operated.

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