Builders, shops and entertainment hit by downturn in UK
22-07-2007
According to a survey from the Association of Business Recovery Professionals, R3, property developers and estate agents, the construction industry and pubs, clubs and restaurants emerged as the top three troubled sectors.
Manufacturers, finance and business services, travel and transport and technology were also flagged up as having difficulties by insolvency practitioners (IPs).
Reasons given for the commercial insolvencies experienced by firms unsurprisingly included the economic downturn or credit crunch, but over 60 per cent of respondents said poor financial management played a part in many firm's problems as well as a failure to take advice early.
Other reasons given include lack of planning, irresponsible lending by banks and firms' irresponsible borrowing. Other additional factors added to the list by insolvency specialists include rising fuel and commodity costs, action by creditors and difficulty getting funding.
Personal insolvencies were also thought to be on the rise, with 33 per cent of insolvency specialists saying they have seen a rise over the last three months, although 18 per cent said they had seen no change.
When asked to choose factors explaining the rise, 53 per cent of IPs chose 'borrowing being seen as a way of life' with 43 per cent selecting 'irresponsible borrowing', closely followed by 36 per cent with 'irresponsible lending'.
Nick O'Reilly, president of R3, said: "Our survey indicates that on the personal insolvency side, debt is no longer just an issue for those in low income brackets – 14 per cent of IPs have had people walking through their door on incomes of £30,000-£39,000, which is way above the national average salary of roughly £25,000."
He added: "These are people on good salaries perhaps working in financial services, and not the 'traditional debtor' at all."
IPs also cited the general economic downturn, lack of a general financial education, life events including job loss and death and divorce as contributing to rising insolvency levels.
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