Around 4500 jobs are at risk at the 90 year old retailer after its board called in administrators following poor results over the crucial Christmas trading period - when it traditionally makes most of its sales.
Like many other big name high street traders, HMV has failed to find a way through difficult economic conditions and fierce competition from supermarkets. HMV has been struggling with debts for just over 2 years, and while banks have revised the terms of their loans it was thought to have been handed a lifeline after its suppliers traded improved commercial terms in return for shares in the business. but those firms were said last night to have refused to agree to provide additional financing to the retailer, leaving it with few options to find the extra resources needed to keep it going.
Commenting on the news, GMB senior Organizer Giovanna Holt said; "This announcement is a further hammer blow to the the UK retail sector, coming on the back of recent collapses of Comet and Jessops and extremely disappointing Christmas sales. We have an economy that is heading towards a triple dip recession as it continues to shrink against a backdrop of job insecurity, weak consumer spending and a drop in manufacturing output.
Figures produced by the National Institute for Economic and social research (NIESR) suggest the economy shrank by 0.3% in the three months to December. This was preceded by an artificially high boost to growth in the third quarter from Olympic ticket sales. Taking the six months as a single period, the economy was flat, just as it was in the first six months of the year.
Demand for goods in Britain has been hammered by economic uncertainty, below-inflation wage growth and punishing austerity, while exports have been hit by the eurozone crisis. Separate figures out from the ONS on Friday only added to concerns, as construction output also dropped 3.4% in November.
Under the coalition government's economic policies we've seen squeezed living standards, rising long-term unemployment, a flatlining economy, and borrowing rising by 10% so far this year as a result. So we need strong growth simply to catch up all the ground we have lost over the last two years which we're not going to see without a radical change in direction."