The British Retail Consortium's director general has warned that small and medium size enterprises (SMEs) face significant risks of failing during 2008, in an interview with the BBC.
Speaking about the Bank of England's Monetary Policy Committee meeting later today to discuss interest rates, he said that trading conditions would likely mean many small and medium retailers going out of business.
His statement comes as entrepreneurial think-tank the Tenon Forum released figures showing that 38 per cent of its members questioned do not have plans to cope with an economic downturn, as well as other factors such as competition and red tape.
Andy Raynor, CEO of Tenon, commenting about the results said: “Despite recent interest rate movements, talk of recession is still prevalent so it's understandable that entrepreneurs at the helm of the UK's SMEs are nervous about what 2008 will bring.
"Many of today's owner-managers will not have experienced such a pronounced economic downturn before so it's extremely important that they put robust plans in place now in the event of challenging times ahead. By taking some basic steps, entrepreneurs can help their business weather the storm."
The Bank of England Monetary Policy Committee held the interest rate at 5.5 per cent, despite calls for a rate cut.
Both Kevin Hawkins and Marks & Spencer's Stuart Rose had lobbied the MPC for a rate cut, however, city analysts remained sceptical pointing out that the Bank of England has not cut interest rates in consecutive months since 2001.
They added that they believed the Bank was unlikely to do so in a downturn for fear of markets seeing the move as it being in panic mode.