Fewer businesses set to go bust

13 April 2012

THE number of businesses going under is set to fall this year for the first time since 1997, says the latest Industry Watch report from financial services group BDO Stoy Hayward.

But the bankruptcy rate is still 20% above the lows reached in 1997, and remains higher than at any time between 1995 and 2001.

BDO still sees the number of failures rising again over the next two years, to their highest levels since the early 1990s. It predicts business failures will fall 5.4% this year, after a sharp 6.6% decline in the second quarter.

For once manufacturing is staging a comeback, with failures falling 10% thanks to the cheaper pound and a recovery in the US economy.

This still leaves one in 40 manufacturers going under this year, a bankruptcy rate twice the national average.

And, ominously, BDO also sees a sharp 15% rise in failures in the bigger services sector, as consumer spending comes off the boil.

The mixed economic picture is reinforced by new data from the housing market.

Property website Rightmove says asking prices have fallen 0.6% in the past month, including a 2.8% slump in London. Average homes in London are now worth less than a year ago.

But demand nationally is increasingly outstripping fresh supply, which must temper fears of a prolonged downturn. Some 31,700 more properties came off the market last month than were put up for sale.

Eyes will turn to the US Federal Reserve this week.

Although it is expected to leave interest rates on hold at 1%, markets will be reading chairman Alan Greenspan's accompanying statement closely for further signs on the outlook for the world's biggest economy.

This summer's sharp rise in long-term borrowing rates appears to be slowing consumer spending.

And recent data shows the recovery has yet to start lowering the jobless rate.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in