Car giant MG Rover’s collapse apparently has had quite an adverse affect on consumer confidence, sending out fears in the market of more firms becoming bankrupt and being declared insolvent.
Experian research reports revealed yesterday that business failures had consecutively risen in the first quarter of 2005 as well, after a rise in the last quarter of 2004. The research showed that trade had been the worst affected by dipping consumer confidence and the resultant low consumer spending. The food retail industry recorded a whopping 53 percent rise in business insolvencies annually while the non-food sector saw business failures climb to about 30 percent.
There seems to be more bad news as Experian predicts that the insolvency trend has a long way to go and is far from finish; especially for the automobile industry, which has interest rates escalating and consumer confidence decelerating due to Rover’s huge downfall.
The first quarter of 2005 witnessed a 1.9 % rise in corporate failures, with 4,168 collapses recorded in 2005 against 4,092 of 2004’s first quarter. In fact, even voluntary liquidations which had not risen in more than two years gave way and registered an increase of about 2%.
Even though the automotive industry has been amongst the 15 sectors that had their failures decreasing, managing director of Experian’s Business Information division, Phil Cotter dismissed all hopes of a decline in failures in the future and said that Rover’s crash had left the industry in jitters and many more liquidations and insolvencies in the offing.
Posted
on : Fri, 29 Apr 2005 10:55 GMT | Business News
By : Mike Lawson
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