Businesses reliant on consumer spending could face further
hardship. New debt statistics show that outstanding personal debt
stood at £1.412 trillion at the end of August 2012. This is up from
£1.407 trillion when compared to the previous year.
The average household debt in the UK, excluding mortgages, was
£5,949 in August. The statistics were supplied by Credit Action.
The Office for Budget Responsibility predicts that total household
debt will reach £2.044 trillion in Q1 2017.
Already strained businesses could see profits fall further as
consumers reduce their non-essential spending. Many sectors are
already suffering as a result of the double dip recession.
Consumer spending can cause a knock on effect to other sectors.
When a business becomes insolvent or makes late
payments it places a considerable amount of strain on its
creditors. Using credit reports to check businesses
before entering any agreements can stop weaknesses in a supply
Non-food retail in particular is struggling. The number of
high-profile failures in the sector this year highlights the
difficulty of the current market. Clinton Cards, Game and JJB
Sports are just a few of the well-known names to have failed
With margins squeezed and revenues in a downward spiral,
reducing cost is one of the few options available that businesses
can take to ensure survival.