More than 70,000 businesses are set to fail in the next three years as a downturn in consumer confidence and a sluggish economy take their toll, a report claims.

Just over 19,900 businesses went under during 2002, 6 per cent up on 2001's figure, according to an Industry Watch report.

The group warned that annual business failures look set to rise above the 20,000 mark in the coming two years, to reach almost 25,000 a year by 2005 -- a level not seen since 1993.

This would be the equivalent of 471 businesses going bust each week, compared with 383 a week in 2002 and 303 a week in 1997.

The group said below-par growth, weak domestic and international demand and tumbling share prices had all hit company profits.

The report expects the manufacturing sector to be the worst hit, with a 12 per cent increase in the number of of companies closing between the third quarter of 2002 and 2003, as gloomy export markets and an overvalued pound continue to take their toll.

The travel and transport sector is also expected to suffer in the short-term, with the number of businesses going under rising by up to 43 per cent during the same period, although this represents only 1.3 per cent of all firms in the sector.

Shay Bannon, business recovery services partner at the industry watchdog, said: "In many industries we are now seeing the full impact of the economic slowdown that started three years ago.

"Consumer wealth is under attack from several directions.

"Fear of a housing slump, stock market falls, pensions uncertainty, national insurance rises, job insecurity and worries about war will curb consumer spending."

But he added that it was the failure of senior management to appreciate the financial position of their business which ultimately exposed it to risk.

He said: "It's important that management teams learn to spot the signs that their business may be in trouble and don't bury their heads in the sand.

"The chances of survival can be greatly increased through seeking advice and implementing a rescue plan before it's too late."

Additionally, 41 per cent more consumer service firms said they were less confident about their business situation than those who were more confident, compared with 31 per cent more the previous quarter.

Tuesday March 11 2003