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Tuesday, February 13, 2007

Administrations Jump

Deloittes have published figures that show a 26% jump in UK business administrations, when comparing 2006 with 2005.

Neville Kahn, reorganisation services partner at Deloitte, said:

"Many businesses have shown signs of distress over the past year. Our research shows that the worst hit were in the financial services, hospitality & leisure and recruitment and business support services sectors. The overarching theme of increased costs appears to have hit a large number of the businesses.

In the financial and recruitment sectors we have seen an increased regulatory burden and in hospitality & leisure - a typically high cost environment – we have seen businesses punished by their thin margins when volatility occurs. Overall, the figures suggest the economy is not as healthy as it might seem on the surface
."

The main sectors which saw increases in administration levels from 2006 to 2005 are:

-Recruitment and business support services saw an increase of almost 90%
-Hospitality and leisure businesses saw an increase of over 50%
-Financial services businesses saw in increase of nearly 50%

Lee Manning, reorganisation services partner at Deloitte, said:

"The costs associated with running an independent financial advisory business, such as FSA regulation and professional indemnity insurance, have increased significantly in recent years making it more difficult for the smaller businesses to absorb these costs."

Whether the culling of small firms is good news for the consumer is questionable.

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