UK property and construction industries worst hit by recession
The property and construction industries in the UK are likely to the worst hit as the economy continues to deteriorate, predicts the latest research.
Up to 10,300 businesses in property and construction could fail during 2009, according to the report from accountants and business advisors BDO Stoy Hayward.
Its research indicates that one in 56 companies across the UK will go bust in 2009, a 59% rise on last year. That means a total of 36,000 companies will fail this year.
'The deteriorating economy and expectations of a drawn out recession has led to a downward revision in the UK outlook and has severely impacted the survival rate of UK businesses,' said Shay Bannon, head of business restructuring at BDO Stoy Hayward.
Meanwhile figures from Pricewaterhouse Coopers show that eight construction companies went insolvent every day in the last quarter of 2008.
According to the consultant's figures, 692 construction firms went bust in the last quarter of 2008, up 28% from 540 the previous quarter.
This took the annual total for 2008 to 2,100 construction insolvencies, a 40% jump on the previous year's figure of 1,500 and the highest level since PwC began tracking these statistics six years ago.
'It doesn't come as a major surprise and I expect there will be further deterioration in 2009. The impact is across the sector. Even those contractors who are currently cash rich need to be alert to the unwinding of cash flows on major projects and in particular the risk of financial failure in their supply chain,' said Jonathan Hook, head of construction and house building at PwC.
The plight of small and medium size companies has been compounded in recent months by a lack of credit and shrinking debt facilities from lenders, he added.