PwC names 'most vulnerable' sectors

Metal product producers, financial services and hotels and restaurants are the three most vulnerable sectors in the economic downturn, a new report has said.

In its Sector Vulnerability Index, Pricewaterhouse Coopers (PwC) examined 15 major UK industry sectors based on their current financial strength, dependence on the wider economy and potential for growth.

The metal products sector was judged to be most vulnerable, due to its high dependence on the economy. PwC also said that the sector was exposed to unstable global metals markets and was seeing low profits that had only limited potential to grow in the future.

Financial services was named the second most vulnerable sector. PwC said that while Government intervention may have helped prevent a fall of output in the sector, there now exists relatively poor prospects for shareholder returns.

Meanwhile, the hotel and restaurant industry's high dependence on the economy and its potential inability to meet interest payments on outstanding debt put it in third place.

Food retail and utilities were judged the two least vulnerable sectors. PwC said that the food sector has remained relatively strong despite the general fall in consumer spending and that utilities are more likely to be affected by regulation and weather conditions than short-term economic fluctuations.

John Hawksworth, head of macroeconomics at PricewaterhouseCoopers LLP, said: "Our research shows that the most vulnerable sectors are those that are highly cyclical without enjoying the buffer of strong financial positions."