BDO Stoy Hayward forecasts 32,300 business failures across all sectors of industry in 2009.

Accountants and business advisors BDO Stoy Hayward LLP has predicted that 250 construction firms could collapse per week during 2009 – a total of more than 6,000.

The firm’s Industry Watch report forecasts 32,300 business failures across all sectors of industry in 2009, up 50% on the predicted 21,900 by the end of 2008, and the highest recorded since 1992 when 33,900 firms failed.

Construction (6,400 business failures) will be the worst affected industry sector, the firm predicts, followed by business services (5,700), real estate (3,200) and manufacturing (3,000).

Measures announced in the Pre-Budget report will go a little way to drive down these numbers, it also suggests. A predicted 1,100 businesses will be saved through the newly announced fiscal stimulus. Without these changes, the number of business failures would rise to an estimated 33,500.

According to the report, consumption growth is set to fall to 1.0% by the end of this year as the economy starts to retract and consumers tighten their belts. In 2009 however, rising unemployment and weakening earnings growth will be compounded by increases in savings. Falling inflation will only partially offset these effects as consumption in 2009 is predicted to decline by 1.5% and GDP is expected to contract by 1.0%.

However, Shay Bannon, Head of Business Restructuring at BDO Stoy Hayward, said: “Despite the pessimistic outlook in the short term, the UK economy is in a better position in this stage than in recessions seen before. Low interest rates and inflation gives the UK strong economic foundations for recovery.

“The PBR measures should act to mitigate some of the effects of the financial crisis intensification and prevent growth falling below the -1.25% limit of the Treasury forecast but this all seems too little too late for those UK businesses which will not survive the downturn.”

Shay added: “All sectors across the economy will be hit over the next eighteen months as all businesses feel the impact of the challenging environment. It is important that businesses now, more than ever, focus on managing and sustaining their cash flow and find ways of effectively meeting the needs of consumers.”