Recovery specialists Begbies Traynor revealed today that the number of companies on its critical list increased 81 per cent in the fourth quarter of 2008.
It recorded a 245 per cent increase in the number of distressed companies in 2008 compared with 2007.
A total 5,651 business faced “critical” problems in the fourth quarter of 2008, compared with 3,104 in the same period last year. The number of companies on the critical list peaked in the month of November at a high of 1,922.
The difficulty of securing credit and discounting price wars between stores in an attempt to attract budget-conscious shoppers has been a major factor in the downturn.
Begbies Traynor partner Nick Hood said: “We expect the rate of retail failures, running at an annualised figure of 1,600 in the weeks before Christmas and up 58 per cent from 2007, to accelerate sharply through 2009 as sales continue to fall despite ongoing discounting and as the weakness of sterling drives up costs.
“This severe squeeze on retail profitability will force many more companies out of business.”
The critical list is determined by companies with county court judgments of over£5,000 or winding-up petitions within the past three months.
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