Slowdown starts to bite
THE real economy is increasingly feeling the pain of the global slowdown, and business failures are on the rise, two surveys said today.
A study by business pressure group the CBI and commercial property adviser GVA Grimley reveals that an increasing number of companies are planning to reduce their property holdings in the next six months as the economy tightens.
Retail, manufacturing and leisure are the sectors showing the biggest change in sentiment, the survey said.
Firms were asked about the impact of the credit squeeze and the slowing economy and around 80% reported each was having an effect on their business. In the previous survey the impact from the credit squeeze was still contained largely to the financial services sector.
In the current study, conducted during August and September, 50% of companies said the surplus property is an issue. This follows the government’s recent changes to empty property rate relief.
Mark Rawstron, senior regional director at GVA Grimley’s Manchester office, described the rate relief reforms as “ludicrous” and one which would impact on jobs, regeneration and investment.
He said the North West would be hit “harder than other regions” as a result of the presence of large numbers of manufacturing, distribution and industrial companies here.
“It’s not really surprising that the wider economy is feeling the pain – the world is awash with bad news after bad news at the moment. Most firms are now feeling at least some effect from the tighter lending conditions and the economic slowdown.”
Karen Dee, the CBI’s head of infrastructure said: “Businesses are paying a billion pounds a year more due to the government’s changes to empty property rate relief.
“Companies are facing up to a recession and need to reduce costs, so this could not have come at a worse time. The government should look at everything it can do to help businesses through these difficult times and reversing its recent decision on empty rate relief would be one good way of doing so.”
Meanwhile, North West business failures increased by 33.6% in the third quarter compared with last year, with 800 failures recorded, according to Experian.
Only London (969) and the South East (1,163) had more insolvencies.
Business failures for the first nine months of the year also increased across the region – by 33.7% to 2,270.
Across the UK, there were 16,591 business failures in the first nine months of 2008, representing a 22% increase on 2007.
