The Uk has seen an 11% leap in corporate failures in 2005. The annual total has risen to its highest since 2002 and is expected to rise further.
After falling for two years, corporate failures rose in 2005 to 18,122, with the Retail (particularly non-food with a 40% increase)and Business Services (up 12%) sectors worst affected, according to Experian, the global information solutions company.
Corporate failures also rose by 7% to 4,501 in the final three months of 2005, compared with 4,193 in the fourth quarter of 2004.
“The financial landscape for UK companies had already begun to change by the start of 2005 as rising interest rates and the consumer slowdown all took their toll,” said Richard Lloyd, Managing Director of Experian’s Business Information division. “And, of course, the rapid rise in energy prices hasn’t helped. Recent high profile failures such as Unwins, LDV, Tiles R Us and MVC, all in the last month, indicate just how fragile some sections of the economy are as we move into the New Year.
“We are forecasting that corporate failures will continue to rise in 2006 and so encourage businesses to ensure that they make the necessary checks on their customers, prospects and suppliers to ensure they are forewarned about any experiencing cash flow difficulties and possible failure. By taking the necessary action at the right time, businesses can prevent themselves going the same way and bearing the brunt of another company’s business failure.”
With even large retailers showing distinct signs of distress it is widely expected that the coming weeks will see a big high street name go to the wall.
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