Failures expected to decline, but will rise in retail sector

The number of business failures will fall over the coming three years but remain above pre-recession levels, according to a forecast by the accounting firm BDO.

It estimates that the number of failures will fall to 20,536 a year by 2015, from a peak of 26,196 in 2009. BDO identifies a squeeze on the disposable income of UK households as one of the primary reasons for the slow recovery and concludes that retail and personal services companies are likely to be the most severely affected.

BDO predicts that the number of retail sector failures will rise by 12.5 per cent to 3,104 in 2011 from 2,759 in 2010. It expects the personal services sector, such as hair, beauty and consumer goods repairs, to see an increase in failures of 2.8 per cent to 1,288 in 2011, up from 1,252 in 2010.