2 460 UK manufacturers could go out of business in 2009

There will be a high of 2,460 business failures in the UK manufacturing sector during 2009, according to predictions just released by accountants and business advisors BDO Stoy Hayward LLP.

Manufacturing output remains significantly below pre-recession levels and there will be a high of 2,460 business failures in 2009, compared to the 1,600 recorded in 2008, according to the accountancy firm's latest Industry Watch report.

However, BDO Stoy Hayward said that its research also showed light at the end of the tunnel for manufacturing industry. It added that the manufacturing sector is likely to be one of the better performing areas of the economy following the downturn, with recent output figures showing growth in the sector.

Going forward into 2010, business failures are expected to drop to 2,090, the firm predicted. As the manufacturing industry emerges from the downturn, a variety of factors will signal an improved outlook. Among these are the easing of credit constraints, lower sterling exchange rates and increased domestic and external demand.

Kim Stubbs, manufacturing business restructuring partner at BDO Stoy Hayward, said: "There are evidently still challenging times ahead for the manufacturing sector, with high levels of business failures expected in the coming months.

"But the inventory cycle has a key role to play in the recovery and businesses that draw their destocking to a close and increase their inventories, will contribute significantly to the rebound in the industry. This, alongside reduced restraint on credit and lower sterling exchange rates, signals light at the end of the tunnel for the manufacturing sector."

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