Slowdown on firms failing

The rate of business failures in the UK will slow to one per cent over the next two years owing partly to a more stable economy, according to a recent BDO Stoy Hayward report.

Although BDO predicted that business failures will rise to 17,355 for 2007, up from 17,215 this year, the analyst claimed that recent improvements in the UK and global macro-economic outlook will slow the rate of business failures.

Shay Bannon, business restructuring partner at BDO Stoy Hayward, said: “It is now essential that Gordon Brown builds on his Budget pledges. This will create a positive environment for business investment so that all sectors will be able to report a decline in failures.”

Business failures in the wholesale-trade sector will drop from 972 in 2005 to 747 this year, and down to 719 by 2007. This represents a failure rate of 0.5 per cent, which is the lowest ever recorded for the sector.

The number of failures in the manufacturing sector is expected to fall from 2,198 this year to 2,196 in 2007.

Richard White, director of public-sector sales at Centerprise International, said: “VARs that don’t prove their value-add in the channel will be under the heaviest pressure, and services continue to be the highest factor affecting sales. Those in hardware only will likely suffer the highest rate of business failures.”

james_sherwood@vnu.co.uk