Failure is haunting the retailers

BUSINESS failures are on the rise, casting a cloud over the Labour Government's claim of an exemplary economic record. Research from Experian reveals that a fall in consumer confidence and a slowdown in spending has caused a dramatic increase in the number of retailers in trouble.

Food retailers saw a 53% increase in the number of business failures in the first quarter, while non-food retailers saw a 30% rise in insolvencies compared to a year ago.

Across all sectors, a total of 4,168 companies failed in the first quarter of this year, compared with 4,092 a year ago. Voluntary liquidations increased by 2% - the first increase in two years.

Administration orders increased by 51%, though compulsory liquidations were lower. The tide appears to have turned for the worse as this is the second consecutive quarterly rise in corporate failures, following two years of falling insolvency levels.

The number of firms facing problems appears to be accelerating. Experian expects the gloomy trend to continue throughout the year. Spokesman Phil Cotter said: 'In contrast to 2004 when the UK recorded the lowest number of corporate failures since 1998, today's insolvency trends are telling us a different story.'

Retail is not the only sector to be hard hit. Servicing and repair, agriculture and fishing also had a tough quarter. In contrast, business failures declined in the printing, telecoms and IT sectors. Motor traders also saw a reprieve with insolvencies down by 12%, though this is likely to change in the aftermath of Rover.

Experian warns that the collapse of Rover is likely to have a snowball effect on firms which sell goods to some of Rover's suppliers, so warns businesses to be vigilant.

THE decline in consumer confidence has yet to hit London's financial community. The number of job vacancies in the City last month was 10,521, more than double the number in March 2004, according to Morgan McKinley.

Some 64% of City firms expect to hire more staff this year and employers say it is tricky to find good candidates. Meanwhile, the average basic salary in the City increased by 1% to £46,990 in March.