Business defaults on the rise, says Veda 

Source: ONE News

The number of businesses in New Zealand defaulting on loans and lines of credit is increasing, says credit reporting agency Veda Advantage.

Agency data shows a nearly 50% increase in commercial defaults for the 10 months to October 2009 compared with the same period last year.

In the month of October, there was a 55.3% increase in business defaults compared with October 2008.

"These are the numbers which explain, in part, why the government's tax take is down. Businesses are experiencing tough trading conditions and now we are seeing the end result - businesses can't pay their bills," says Veda managing director John Roberts.

Treasury figures released on Wednesday show the government's corporate tax revenue for the three months to September 2009 was $900 million lower than forecast.

Veda Advantage says consumer defaults also rose. The increase, however, was not as marked as those seen in businesses.

Consumer defaults on loans and credit rose 4.29% in the first 10 months of the year compared with the same period last year.

The baby boomer age group - those aged 44-62 years old - were significantly above the average rise at 16.8%. However, this has eased slightly from the 19.37% rise in defaults baby boomers recorded in the agency's September survey.

Mortgage applications continued to grow, up 20.2% in the 10 months to October compared with October 2008. This is also up on the 12.99% recorded in September.

Veda Advantage says consumer applications were down for credit cards, personal loans and hire purchase over the 10 months.