Retailers May Face Worst Of Recession In 2010

(Reuters) – RETAILERS WILL NOT FEEL the worst of the recession until next year, when rising unemployment will drive more than 5,000 of them out of business, according to a report published today.

Accountants and business advisers BDO Stoy Hayward predicted 5,070 retailers will go bust in 2010, up from a forecast 4,630 this year.

‘Unemployment has risen less than the economic contraction originally suggested, with a flexible labour market allowing employers to reduce hours and wages rather than make redundancies,’ said Tony Nygate, retail business restructuring Partner at the firm.

‘These factors have helped maintain retail spending surprisingly well in the face of recession and have been instrumental in preventing even more retailers going into liquidation.

‘However retailers can expect the worst of the recession to hit in 2010 when rising unemployment and structurally lower consumer credit will dampen prospects,’ Nygate said.

… (03/09/2009) – Sub-Prime Losses Gnaw At Recovery’s Roots


4 Responses

  1. Just when we thought the worst was behind us. Last month was all about improvement wasnt it? The RPI was up, the CPI remained steady, the economy shrank less than expected and house prices were going back up.

    • I hope you didn’t get that impression from here, Cynical. I was obliged to publish those green-shoot stories; but I did try to ensure they all gave a balanced view.

      I certainly haven’t called an end to the recession yet – and do not expect to do so for some considerable time…

  2. You don’t think we’ve seen the bottom yet?

    • The bottom of what? The trouble with your question is that it assumes there is some form of economic measure that will provide a definitive answer.

      You would think that GDP would indicate if the recession is over; but that is a false assumption – because GDP includes inventories (buffer stock that manufacturers keep on hand to meet a sudden rise in demand). And buffer stocks have been allowed to decline considerably in this downturn.

      Many economists are predicting a rise in GDP for the 3rd quarter (which is what Darling was banking on in his budget) – and they could be right. But the reason is likely to be that those buffer stocks have just been replaced – and that there has been no real return to production. I think the government will probably be calling an end to the recession based on the Q3 figures at the end of this month. But I also think they will be wrong.

      The problem is that none of the figures are ‘pure’ numbers. In particular, the jobless figures do not reflect what is actually the case.

      The fact is: there are 3.3 million workless households in the UK; but the jobless figure, which does not include full-time students; early retirees or those on disability benefit, is just 2.35 million. And that 3.3 million figure does not reflect the further one million employees whom, because of this recession, have been forced to cut their hours or work part-time.

      That is a hell of a lot of people who have had their spending power cut.

      I do not believe that the government’s policy of bailing out the banks and expecting them to lend more was ever feasible. The fact is that the public have had a reality check and do not want to take out more loans to help spend their way out of recession. And all that base-rate cut has served to achieve is to allow existing home-owners to pay more off of their mortgage and reduce their personal debts.

      This government wanted people to ‘take the money and spend it;’ but they took it and paid off their loans!

      For the first time since records began in 1993, personal debt fell by £600 million in July.

      In years to come, people will look back on this episode and see it for what it is; the biggest give-away, ever. But it is a give-away that we, our children, and our childrens’ children will be paying for the rest of our lives.

      i couldn’t tell you if we have hit rock bottom, Cynical; because I don’t think anyone knows where that bottom is…

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