Barrett Hasseldine,head of modelling at illion,said the failure risk was concentrated among businesses in NSW and Victoria,where the level of business stress was 4 per cent to 5 per cent higher than the national average.
“The cost of rent is higher in Victoria and NSW,which is putting more pressure on households and family budgets in those states,reducing their ability to spend,as well as affecting the rent of businesses operating in those states,” Hasseldine said. Lower levels of government support for businesses and fewer amnesties from lenders also played a part,he said.
Hasseldine said business conditions tended to mirror household conditions – including consumer credit risk,consumer spending and consumer confidence – but with a three- to six-month lag.
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While many people took out credit cards 12 months ago to help cover their monthly expenses,Hasseldine said those consumers would probably start to pull back further on their discretionary spending.
“Quite a few consumers are now starting to fall behind on their credit card payments,and so that lifeline is now coming to an end,” he said.
Businesses in sectors including food services and accommodation are especially at risk,Hasseldine said. “Financial services and insurance certainly are seen much more as an essential service to most households,compared to going out for a Sunday breakfast,” he said.