According to figures released by Equifax, 120 businesses are collapsing each day which is 20 percent more than in the same period last year. Experts fear that the weakened economy will claim even more businesses before the end of 2011.
During the third quarter of 2011, 7,994 businesses collapsed which is almost at the same level as during the peak of the recession. However, the figures don’t paint an accurate picture, as they don’t include businesses which have a voluntary arrangement, or receivership or administration. As companies fail, the level of unemployment continues to rise, which already stands at the highest level for 17 years. A large number of experts place the blame on the banks, which have increased charges and aren’t lending money to businesses.
The Federation of Small Businesses has conducted a poll, which has revealed that a number of their members are looking to make cuts. The FSB have called for tax cuts for small businesses and an extension of the National Insurance holiday to all areas of the UK, and to include small businesses with fewer than four employees. The business group are also calling for a reduction in VAT from 20 percent to five percent for businesses in the tourism and construction sectors.
A spokesman for the Department for Business said that Corporation Tax was being reduced to 23 percent from the current rate of 28 percent, and small business rate would be reduced to 20 percent. He also said that they would ensure that banks met their lending targets for 2011-12, as pledged in the Merlin Project.
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