UK business failures fall to record lows.(headlines)

2004 is expected to record the lowest number of business failures for six years, according to experts at BDO Stoy Hayward. The latest BDO Stoy Hayward Industry Watch reveals an 8 per cent drop in the number of companies going bust from last year's figure of 17,550. This will bring the number of UK failures for 2004 down to 16,150, a rate of 0.9 per cent, equivalent to an average of 310 businesses going bust per week.

A soft landing for the economy is expected in 2005 although faltering consumer spending combined with an uncertain global economic outlook will dent business optimism. Consequently Industry Watch predicts that 16,250 businesses will fail in 2005, which translates into 312 firms folding per week This increase is, however, slight and remains well below failure rates recorded in recent years.

Industry Watch's sector analysis reveals that although most sectors should experience a drop in total failures for 2004, divergent trends emerge over the long term. The service sector, suffering until recently, has become a Cinderella story whereas in contrast, leisure sector growth will enter the doldrums, forcing out ailing firms as a result.

Some 2,660 service sector companies are expected to have folded by the end of 2004--a drop of 21 per cent from last year's figure of 3,370. The service industry, the first of the sectors to feel the pinch in a slowdown, is finally benefiting from a surge in demand from companies. Businesses keen to maintain an edge are expected to increase advertising and research spend, which is set to reduce the failure rate lot the service sector to 0.8 per cent in 2004 and further to 0.7 per cent in 2005.

There is also good news for the manufacturing sector as the number of business failures is expected to drop from 2,440 to 2,230 by the end of 2004--their lowest ever level since current records began in 1993. Moreover, with the pound expected to weaken against both the dollar and the euro, export ...