60 firms will collapse every day this year as recession continues to takes its toll
As many as 60 firms will collapse every day this year due to the crippling impact of the recession and the fragile recovery, research reveals today.
But the silver lining for bosses is that workers are willing to take a pay cut and a more junior position to secure a job because they are so concerned about their bleak employment prospects.
The number of ‘business failures’ will remain around the current level for the following two years.
Worrying: Up to 60 firms will collapse every day this year due to the crippling impact of the recession
This means more than 60,000 businesses will disappear between 2010 and 2012, according to the research, from the accountants and business advisers BDO.
Many businesses blame their failure on the fact that they cannot get the help from their bank that they need, such as a loan or an overdraft.
It comes as a separate study reveals jobseekers are resorting to desperate measures. A survey, from the website Gumtree.com, found more than 40 per cent are ‘willing to take a pay cut’ to secure a job.
It also found 39 per cent are ‘ prepared to take on a more junior role’ in order to find work during these tough times.
With help not forthcoming from the banks, bosses say they have to beg for money from friends and family, remortgage their homes or even pawn their possessions.
Business failures in the UK peaked in 2009 at 26,196, but BDO predicts the figure will hit 21,579 this year, 20,149 in 2011 and 19,292 in 2012.
By comparison, there were just 16,431 failed businesses in 2007, the year that the credit crunch began but before the chaos that it triggered had really kicked in. A business failure includes all types of company collapse, such as receivership, administration and compulsory or voluntary liquidation.
BDO said certain sectors, such as retail, personal services and leisure, will be the hardest hit.
This is because they are dependent on consumer spending, which will be knocked by tax rises and further job losses which will start next year.
Shay Bannon, head of business restructuring at BDO, said: ‘The average UK household’s income will continue to decrease, meaning people will have less cash in their pockets to spend on the “nice-to-haves”.’
Official figures from the Office for National Statistics show the search for a job can be a nightmare, with more than five unemployed people chasing every job vacancy.
The situation is almost guaranteed to get even worse over the next few years as more than 600,000 public sector workers are expected to lose their jobs.
There are already nearly 2.5million unemployed people in Britain, with economists predicting this could climb to three million in the near future.
Gumtree.com’s research, based on the views of 300 personnel executives and 3,000 jobhunters, also revealed many public sector workers are running for the exit because they fear for their future.
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