news 5 ‘Zombie businesses’ on the up, says R3
The number of ‘zombie businesses’ in the South East has increased dramatically in the past nine months from 5,000 to 23,000.
Local insolvency experts warn the figures suggest the economic recovery is putting pressure on some businesses rather than making their lives easier.
Experts from the Southern Committee of R3, which brings together insolvency practitioners from local accountancy, legal and recovery firms, say thousands of businesses risk getting
stuck in a state of limbo where they are still in business but with little chance of growth.
Zombie businesses are defined as those that can only pay off the interest on their debts rather than paying off the debts themselves. In November 2013 the number in the South East dropped to a record low of 5,000. But latest figures show the number has skyrocketed to 23,000.
Andrew Watling, chairman of the Southern Committee of R3, the insolvency trade
August commercial construction close to doubling 2013 figure
Figures released in September reveal that the total value of commercial and retail construction contracts in August almost doubled compared to the same month in 2013.
Barbour ABI, the chosen provider of the Government’s Construction and Infrastructure Pipeline, has published its latest Economic & Construction Market Review, which shows that the value of commercial and retail construction contracts totalled more than £870 million in August, a 95.8% increase on the same month last year and 17.4% higher than July.
The report, available to download from the Barbour- ABI website (see details), also shows that the sector accounted for just over a quarter (26%) of the total value of all construction contracts UK-wide, with more than half of these (54%) awarded in London.
On the findings of the report, Michael Dall, lead economist at Barbour ABI, commented: “Commercial & retail construction has seen
a real resurgence recently. This is mainly due to big ticket projects in London and further afield, such as the £420 million contract for 10 Fenchurch Street and £100m commercial developments in Branston, Staffordshire and Botley, Oxfordshire respectively.
“Once again, offices were the dominant type of project in the sector, accounting for 71% of the value of contracts awarded in August, with general retailing at 23%. Looking ahead, the sector should continue to prosper as long as the Capital remains an attractive proposition for investors.”
The Economic & Construction Market Review is a monthly report designed to give valuable insight into UK construction industry performance. It is compiled from Barbour ABI’s records of construction data for every UK planning application, and key indicators, such as the Office for National Statistics’ Construction New Orders data.
Details:
www.barbour-abi.com THE BUSINESS MAGAZINE – THAMES VALLEY – OCTOBER 2014
www.businessmag.co.uk
body, and a director at Quantuma in Southampton, said: “The first flush of growth generated plenty of cash for businesses but now some are experiencing the side-effects of growth too. Over-trading and late payment can easily put businesses with bulging order books in a position where cashflow becomes a major headache.
“Businesses will get into trouble if they’re trying to run before they can walk and don’t get paid quickly enough for the work they’re doing. Access to new finance
is still tight so businesses low on cash have limited options to give themselves some breathing room.
“Making the minimum payments on debts or renegotiating payment terms with creditors can free up some extra cash and buy some time, but it’s not a long-term solution. Healthy cashflow is critical.”
Among the members of R3 are representatives from Moore Stephens, Chantrey Vellacott and Blake Morgan.
Details:
www.r3.org.uk
In the November issue of The Business Magazine
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