Retail failures to increase 23 per cent

The abrupt end to the consumer boom is expected to push retail business failures up by 23 per cent to 1,178 by the end of this year compared with last, according to accountancy firm BDO Stoy Hayward. However, even after the forecast rise, failure rates in retailing would remain the lowest across all sectors.

BDO Stoy Hayward expects 0.5 per cent of retailers to fail next year, compared with, for example, 1.9 per cent in the manufacturing sector. Business failures rates are set to increase marginally, but to remain at last-year's level of 0.9 per cent.

Shay Bannon, BDO restructuring partner, said of the company's latest Industry Watch: 'Businesses are facing a difficult combination of circumstances as slower economic growth, higher interest rates and increased inflation raise the pressure.'

BDO predicts that while the retail and leisure sectors are likely to be hit hardest by declining consumer confidence, an interest rate cut from the Bank of England would ease the pressure throughout next year and lead to a 14 per cent drop in business failures in the sector next year.