6,400 construction firms to fail by mid-2009

Source: Exec Digital UK

Date :02/12/2008 11:12:44

2009 will see 50 percent more businesses fail, and topping the list of hard-hit sectors is the construction industry.

The report, by accountancy firm BDO Stoy Hayward, reveals that the number of businesses going under in 2008 is expected to reach 21,900, and that number is set to increase still more dramatically with 32,300 in 2009.

Of that number, the hardest-hit sector is predicted to be construction, with 6,400 businesses collapsing in 2009, the third hardest-hit sector is expected to be linked industry Real Estate with 3,200 businesses going under, and manufacturing will be fourth with 3,000.

BDO’s report estimated that last week’s pre-budget report (PBR) would help a little: "A predicted 1,100 businesses will be saved through the fiscal stimulus." However, the overall rate of businesses going bust is not expected to peak until the year 2010, when 32,400 businesses are expected to fail. That number would be the highest rate of business failures since 1992, when 33,900 failed.

"All sectors across the economy will be hit over the next 18 months,” said Shay Bannon, Head of Business Restructuring at BDO Stoy Hayward. “It is important that businesses now, more than ever, focus on managing and sustaining their cashflow and find ways of effectively meeting the needs of consumers."

“The PBR measures should act to mitigate some of the effects of the financial crisis intensification and prevent growth falling below the -1.25 per cent limit of the Treasury forecast but this all seems too little too late for those UK businesses which will not survive the downturn.”