August 02, 2010
In June 2010, business insolvencies reduced by 13% compared to the same period last year, according to the latest Insolvency Index from global analysts Experian.
In total, 1,771 UK businesses failed in June 2010, 13.4% fewer than in June 2009, when 2,044 firms became insolvent, said the report. As a result, the year-on-year insolvency rate fell from 0.10% to 0.09% in June.
Figures show that the North East of England underwent the highest rate of business insolvencies at 0.14%. By contrast, the South West saw a UK low of 0.07%, with Greater London just lagging behind at 0.08%.
“June's data indicates that the UK's business community as a whole is stabilising, however it also points to the existence of a north versus south divide. Businesses in the north of England seem to be faring slightly worse than their southern counterparts across all industry sectors,” commented Rolf Hickman, Managing Director of Experian company pH Group.
According to experts, SMEs and those companies with just 11-25 employees are currently surviving any lingering recession consequences, marking themselves as the greatest year-on-year proponents of insolvency reduction, from 0.29% in June 2009 to 0.20% this year.
But larger businesses are still struggling to stay afloat in the current climate, as those with 501 or more employees witnessed a doubling of insolvency rate from 00.7% to 0.14% in 12 months.
In addition, the overall financial strength score of UK businesses has also improved. Measured on a scale of 1 to 100, 1 being least likely to fail and 100 most, the financial strength score predicts the likelihood of a business failing in the next 12 months. Over the past 12 months, UK businesses as a whole have improved slightly from 80.83 to 80.66.
"Although the data hints at some improvements, individual organisations are impacted in different ways. It is vital for businesses to understand the circumstances of those they are doing business with and the risks they could expose them to," added Mr Hickman.
