Providers of insolvency services have outlined their expectations for the remainder of 2012, with the retail sector predicted to be hit worst in terms of the number of companies going into administration.
Business insolvency is expected to arise among retailers due to depressed sales to consumers, as figures published in April showed a 1.1% annual fall in spending.
This has led half of the insolvency practitioners surveyed by R3, the Association of Business Recovery Professionals, to identify retail as the most endangered sector.
By comparison, in October 2010, just 28% of the insolvency services providers surveyed thought retailers were in peril.
Curiously, many of the surveyed insolvency practitioners were more concerned about rising interest rates and subdued bank lending than they were about consumer spending directly.
“This is perhaps a reflection that, across the board, businesses are experiencing serious cashflow problems and, consequently, are looking very carefully at what they spend,” says R3’s president Lee Manning.
Only 14% of those surveyed identified consumer spending as the biggest factor for businesses going into administration at present – an indication that business insolvency at present is more to do with the economy itself than with economic conditions at ground level.