Business Insolvency |
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Credit crunch 'not solely to blame' for increase in business closures
04/04/2008
The National Federation of Enterprise Agencies (NFEA) has said that the credit crunch is not solely to blame for the increase in business closures witnessed in the UK last year.
Recent research conducted by Barclays showed that 498,000 businesses closed last year - an eight per cent increase on 2006.
The business closure rate now stands at 17 per cent – just short of the record 18 per cent in 1992 when John Major was prime minister.
NFEA chief executive George Derbyshire refuses to blame the current economic downturn.
"Businesses close for all sorts of reasons; people retire, people sell, people merge, people simply decide that the business has run its course and that they’ll move back into employment," he said.
Mr Derbyshire also thinks the high business closure rate is partly a result of the increasing number of start-ups in recent years.
If this is true then Britain should brace itself for a continuation of the high closure rate. Barclays research showed that 471,000 new businesses started up last year – the highest amount since records began in 1988.
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