Company failures ‘better than expected’
Apr 08 2010
More businesses are open for business than expected
More businesses have weathered the recession than experts predicted, with failures peaking in the first quarter of last year.
Shay Bannon, head of business restructuring at BDO, says: ‘Historically business failures are lagging indicators and continue rising well after the economy has turned. So we were surprised to see that [they] rose far less than expected through this recession and indeed less sharply than during previous recessions.’
According to a report from BDO, reasons for the decline in insolvencies after the first quarter were due to the government’s tax deferral ‘time to pay’ scheme, falling mortgage and interest costs and the impact of reduced VAT on consumer spending.
However, Bannon adds that more needs to be done to prevent a second wave of business failures: ‘A government of any colour must recognise that enterprise is the UK’s engine room and so any increases in VAT or tax reforms hinder [our] competitive global standing.’
The total number of business failures in 2009 was 26,165, an increase of 16 per cent compared to the previous year and up by 59 per cent compared to 2007.
There are currently no comments on this article
Comments