Recession fears deepen as business failures increase

YESTERDAY BROUGHT fresh gloom about the state of the economy, with news of the first rise in business failures for six years. But one employers' organisation warned business against talking itself into a recession in 1999.

The number of business failures climbed to 38,634 in 1998 from 36,368 in 1997, according to Dun & Bradstreet. This was the first increase since 1992, at the bottom of the last recession.

Philip Mellor, an analyst at the business information service, warned: "I see this trend continuing for the next six months." Interest-rate cuts should then start to take effect, he said.

Mathew Farrow, head of the Confederation of British Industry's small business unit, said the figures confirmed other signs of an economic slowdown.

CBI surveys have become markedly more pessimistic in recent months, and the organisation has called for further interest-rate reductions.

But Tim Melville-Ross, director-general of the rival Institute of Directors, yesterday warned against taking too gloomy a view. Business leaders were in danger of talking themselves into a recession in 1999, he said.

"Unfortunately, we are particularly good as a nation at persuading ourselves that the economic situation is worse than it is. But I firmly believe that business is capable of preventing a recession simply by avoiding talking about it as if it were inevitable," he said.

The CBI agreed that the level of business failures remained much lower than during the last recession. The figure reached a peak of 62,767 in 1992.

"This supports the view that although things may get worse, the downturn will not be as long or as deep as last time around," Mr Farrow said. The CBI has itself warned of the risk that recession could become a self-fulfilling prophecy.

Separate figures yesterday suggested that consumer spending and the housing market have continued to hold up well, despite signs that confidence about the economy's prospects is slipping.

The Nationwide reported a 0.8 per cent rise in house prices in December, leaving the annual rate almost unchanged at 7 per cent. The building society said sales were 12 per cent down since the start of the year and confidence was weak.

But it predicted that the housing market was in a good position to weather an economic downturn. Some areas - such as Cambridge, Guildford and Islington in London - were still seeing annual price rises in excess of 20 per cent.

David Parry, head of planning at Nationwide, said: "The strength of household finances will help the housing market weather any downturn."

The British Bankers Association, whose members include 10 of the country's 15 biggest mortgage lenders, said their new lending to homebuyers was pounds 1.1bn in November.

This was above October's pounds 922m and above the recent monthly average - even though banks have been losing market share to the remaining building societies.

The BBA also reported a strong increase in credit card borrowing and personal loans, totalling pounds 6.5bn, in November.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
tvGame of Thrones season 5 ep 4, review - WARNING: contains major spoiliers!
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
Tiger Woods and Lindsey Vonn are breaking up after nearly three years together
peopleFormer couple announce separation in posts on their websites
Life and Style
Google celebrates Bartolomeo Cristofori's 360th birthday
techGoogle Doodle to the rescue
Arts and Entertainment
Haunted looks: Matthew Macfadyen and Timothy Spall star in ‘The Enfield Haunting’
tvThe Enfield Haunting, TV review
The Mattehorn stands reflected in Leisee lake near Sunnegga station on June 30, 2013 near Zermatt, Switzerland
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living