Rising unemployment and falling disposable income growth will lead to a sharp reduction in consumer spending and help to drive business failures up to a record 36,200 (almost one hundred businesses everyday) according to the latest Industry Watch report by accountants and business advisors, BDO Stoy Hayward LLP.
According to the report, low interest rates and policy measures aimed at boosting the economy are not likely to halt the rate of UK business failures until at least 2011, paving the way for a far worse picture to come in 2010 where a staggering 40,400 (111 businesses everyday) are expected to go under.
Shay Bannon, Head of Business Restructuring at BDO Stoy Hayward commented: “Business failures in Great Britain are rising unabated as the fall-out 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. This will drive up business failures in a number of sectors however, we expect slightly less businesses to fail in 2011 as the banking rescue package, rate cuts and other policy measures begin to significantly slow down the rate at which companies fail.”
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