Industry figures have shown that business failures have increased by 8.5 per cent in the first quarter of 2008, suggesting that the unstable economy is beginning to take its toll.
The figures, released by global information services firm Experian, show that 4,798 businesses failed in Q1 2008, which was 374 more than in Q1 2007. This was the highest number since Q4 2006 and the second highest since records began in 1997.
Fifteen of the 34 sectors that were monitored displayed an increase in business failures in Q1 2008 compared to Q1 2007. One of the most prominent increases was in the textiles and clothing sector, which experienced a 29.8 per cent rise on Q1 2007. Building materials business failures increased by 25 per cent while the plastics and rubber sector saw a 17.6 per cent rise.
Elsewhere in the manufacturing sector the situation was not so gloomy. Electricals saw a decrease in business failures of -23.3 per cent, engineering fell by -20 per cent, food manufacturing by -30 per cent, and chemicals industries by a massive -66.7 per cent. The pharmaceutical and brewing sectors saw no change.
Manufacturing firms should, however, remain wary. “These figures are hugely significant, highlighting the impact the continued credit crunch is having on businesses across the UK,” said Tony Pullen, managing director of Experian’s Business Information division.
“The message for businesses right across the board in this uncertain economic environment is clear. They need to exercise caution with regards to their risk exposure and the customers they choose to deal with.”