Gap between business winners and losers widens, as the two-speed recovery is starker than ever

19 April 2013

A clear division will emerge this year between UK businesses able to take advantage of growth opportunities and those left behind to fight it out in difficult markets, according to international accountancy and business services firm, BDO LLP.

The latest BDO Industry Watch report, compiled using independent research from the Centre for Economics and Business Research (Cebr), forecasts a marginal increase in the overall number of business failures over 2012-13, with growth prospects for businesses in all sectors increasing as the economy begins to recover.  But the widening gap - between companies poised to exploit export markets, grow online sales and differentiate both product and service from those whose fortunes are dependent on the high street and cautious UK consumers - will set the stage for a two-speed recovery.

Shay Bannon, Business Restructuring Partner, BDO LLP, commented: "There are real growth opportunities for UK companies, but the current two-speed economic recovery is more distinct than ever. Do not expect the economy to bounce back in the short term – and in the context of this ‘new normal’, businesses cannot afford to simply wait it out. Businesses that develop innovative products, distribution channels and a strong customer proposition will gain significant competitive advantage - irrespective of sector. Those who do not respond to the new normal are at greater risk of falling into difficulty.”

According to BDO, technology, media and telecoms (TMT) will be the sector to watch over the next 12 months, with cutting-edge firms outperforming the wider economy.  TMT will continue to defy the challenging environment for UK businesses as technology becomes increasingly vital to success and growth in all industries.

Property and construction, leisure, and business services sectors, on the other hand, are continuing to experience difficult market conditions. 

Within the retail sector alone, there are both challenges and opportunities, with disparities evolving between those retailers with a strong internet offer and those reliant on high street footfall.  Momentum is swelling behind new mobile platforms that will make engagement with consumers easier and more efficient, and retailers with the ambition and technology – provided by the opportunistic TMT sector – are set to reap the rewards for their businesses.  

A geographical split has also developed in the search for growth and those setting the pace are looking east for opportunity.  With uncertainty rife in the eurozone, and Asian markets predicted to grow by over 7 per cent in 2012, those businesses in the UK looking to the Far East for growth prospects are expected to fare well.  The manufacturing sector in particular has benefited from a hat-trick of a weak pound, ongoing weak interest rates, and falling inflation and commodity costs to return to positive growth territory in early 2012.  BDO forecasts that those businesses in the sector that are able and willing to adapt products to new overseas markets will continue to get support from a weak pound. 

ENDS

Notes to editors

For more information: contact Kate Moffat orBrooke Paul at Spada on behalf of BDO LLP on 020 3130 4783 or bdo@spada.co.uk.

About Industry Watch

  1. BDO Industry Watch is a quarterly projection of company failures in the UK over the coming three years, analysed by industry. It draws on published figures for the five types of business failure and extrapolates into the future using detailed economic forecasts by the Centre for Economics and Business Research (Cebr).
  2. The resulting projection is an invaluable planning tool for banks, accountancy practitioners, service providers as well as companies in the affected industries.
  3. BDO Industry Watch covers five main types of business failure – compulsory liquidations, creditors’ voluntary liquidations, administrative receiverships, administration orders and company voluntary arrangements.
  4. As well as predicting the number of business failures over the forecast horizon, the report also considers which sectors will experience a change in the rate of growth of business failures over a short term horizon of twelve months.

About BDO

BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list of members' names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU.  BDO LLP is authorised and regulated by the Financial Services Authority to conduct investment business.

The combined fee income of all the BDO Member Firms, including the members of their exclusive alliances, was €4.06 billion in 2011. The global network provides business advisory services in 135 countries, with almost 48,800 people working out of 1,118 offices, worldwide.

BDO is the brand name for the BDO International network and for each of the BDO Member Firms.

BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, is licensed to operate within the international BDO network of independent member firms.