Aviation one of five sectors set to suffer in 2013

 
Ben Southwood
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FIVE struggling sectors of the economy could face more woe in 2013, says a report released yesterday.

Aviation, care homes, farming, local authorities and NHS trusts are the five most likely sectors to come in for financial distress over the coming year, according to forecasts from Begbies Traynor, due to funding and demand squeezes.

Airlines face a “devastating increase” to the Air Passenger Duty in April, adding £188 to average air fares from the UK, only one plank of a triple whammy together with recession-hit demand, and still-high fuel prices. Thirty-two per cent of firms in the aviation sector are facing “significant or critical distress” already, even before the tax rise, the business recovery firm says.

Nearly as hit is the care home sector, where some 29 per cent of firms are already in distress, according to Begbies’ figures. This vice is only set to tighten as the £600m – eight per cent – wiped off local government social care budgets is not set to return.

Farming is being clobbered by poor weather and resulting high feed prices, cutting deep into margins on livestock, and pushing farms into alternative sources of revenue like windfarms.

Two other challenged areas are in the public sector. Local authorities are gaining spending autonomy but losing income with a continued freeze in council tax. And 34 NHS trusts have run up a £356m deficit between them – though the sector as a whole is in surplus.

THE FIVE SECTORS

AVIATION: being squeezed by fuel prices, huge levies and ongoing slump.

CARE HOMES: suffering from local authority budget cuts.

FARMING: faces high input costs and poor weather.

LOCAL AUTHORITIES: being hit by continued freezes in council tax.

NHS TRUSTS: coming up against a rapidly rising healthcare burden.