GM bankruptcy seen bringing chain effect: auditor

By Gleb Bryanski

MOSCOW (Reuters) - The global economy will see more bankruptcies but not on the scale of U.S. carmaker General Motors Corp, a senior executive from accounting firm Grant Thornton International said on Monday.

GM, which last week emerged from bankruptcy proceeding and is now more than 60 percent owned by the U.S. Treasury, has pledged to win back American consumers and pay back taxpayers.

"There is a chain effect that is taking place. We have seen the large bankruptcies, now we are going to see that cascading," Mike Starr, Chief Operating Officer of Grant Thornton, one of the top six global accounting firms, told Reuters.

"We are seeing that in the United States, subsequent to GM's bankruptcy, their suppliers are now filing for bankruptcy," Starr said. He said the construction sector as well as oil and gas service sectors will also be affected.

"That (little number of bankruptcies in the construction sector) has been somewhat surprising and that could still be to come. The housing market in the U.S. has not completely recovered," Starr said.

Starr said he believed the economy has stabilized but there were no signs of an upward movement while firms remained cautious. He said access to credit remained an issue despite the governments' fiscal stimulus packages.

"What we do not know is the long term implications (of stimulus packages). We simply do not have the experience. No-one ever lived through anything like this," said Starr.

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