Friday, December 8, 2006
Consumer spending likely to fall in 2008: Corporate debt bubble will burst
Keith McGregor, a partner at accountancy firm Ernst & Young, expects the consumer spending in UK to fall by 10 per cent in the year 2008. During a restructuring conference on Wednesday, he said that the annual spending on non-discretionary retail items is expected to fall, resulting in casualties in the retail sector. However, he expects the spending on food and drink to remain stable.McGregor said that the corporate debt bubble too, will burst in the year 2008, as companies acquired by private equity firms, during the 2005 private equity bubble, have to make their first debt payments after the three-year acquisition period. He added that overleveraged companies would struggle in 2008, after adding high levels of debt in the period after the acquisition.