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UK manufacturing business failures set to rocket by 37%

05 January 2009

The number of UK manufacturing failures was predicted to increase by 37% by the end of 2008 in comparison to 2007, according to research from accountants and business advisors, BDO Stoy Hayward LLP.
The firm’s Manufacturing Industry Watch report forecasted that as economic conditions worsen, the number of manufacturing failures will rise to 1,841 by the end of 2008 - a considerable increase from the 1,341 failures seen during 2007.

UK manufacturing business failures set to rocket by 37%
UK manufacturing business failures set to rocket by 37%

Tom Lawton, Head of Manufacturing, at BDO Stoy Hayward, said: “These figures show the end result of the recent dramatic declines in manufacturing activity and show that many manufacturing companies are entering a period of severe pressure.

“The key to survival in these tough economic conditions will be optimising cash reserves through all possible means, including costs saving exercises and working capital management, particularly inventory reduction,” continued Lawton.

However, worse looks set to come, with the report predicting that 2,413 manufacturers will fail in 2009 - a 31% on the 2008’s predicted figure. Insolvencies in the manufacturing industry are likely to stay at this high level throughout 2010 as 2,349 businesses are forecast to fail.

Lawton concluded: “Despite the short term problems the monetary and fiscal actions being taken should ensure some form of recovery in the not too distant future. We believe that UK manufacturing will be part of this recovery and will continue to form a key component of the UK economy.”

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