Strain on businesses predicted

First published in News

RETAIL sales are on the up but a locally-based business expert is predicting an increase in insolvencies to accompany the economic upswing.

James Stares, chairman of the Southern Committee of R3, which brings together insolvency practitioners from local law and accountancy firms sees trouble ahead.

He said: “As the economy starts to pick up, businesses are exposed to new stresses and strains: cash reserves, exhausted by a recession, begin to run out; creditors can become less patient; businesses can grow faster than cash flow or supply chains can cope with and the consequences of failing to invest during a recession can be felt.

“It’s likely that Hampshire’s high streets will feel this the most, with retailers and pubs and restaurants among the hardest hit.

“Our recent research has shown that while the percentage of retail businesses in the South East at risk of failure has gone down slightly, almost a third have a higher than normal risk of failure.

Similarly, 40 per cent of restaurants/pubs have a heightened risk.

“While it would be bad news to see yet more shops, pubs and restaurants close across the county, a rise in corporate insolvencies could be seen as confirmation that economic recovery is really under way.”

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