The latest BusinessIQ Insolvency Index from Experian®, the global information services company, reveals an 8.7 per cent fall in the number of business insolvencies during October 2012, compared to the same month last year.
The figures highlight an increasingly stable picture amongst businesses, with the data showing that 0.08 per cent of the business population (1,685 companies) failed in October 2012, compared to 0.10 per cent in October 2011.
The greatest improvement in the average rate of insolvencies was seen by firms with 101 to 500 employees – their insolvency rate fell from 0.21 per cent in October 2011 to 0.15 per cent. This was followed closely by firms with 26 to 50 employees whose insolvency rate fell to 0.17 per cent, from 0.22 per cent in October 2011.
The only year-on-year increases in the rate of insolvencies came from larger firms; all those with over 501 employees, which saw an increase from 0.13 per cent in October 2011 to 0.20 per cent. This was led by the demise of JJB Sports, and associated subsidiaries, and also Barracuda Pubs. In addition, small firms with 6 to10 employees also saw a slight increase in insolvencies from 0.16 per cent to 0.17 per cent.
Max Firth, Managing Director, Experian Business Information Services, UK&I said: “Following the peak in March this year at 0.11 per cent, the insolvency rate fell to 0.08 per cent and has remained fairly steady each month since. It shows that insolvencies are indeed stabilising, but the increase during October in large business failures highlights the need for ongoing monitoring of all clients and suppliers, regardless of size.
“It’s good to see that some of the bigger improvements were among the mid sized firms that typically tend to suffer the most due to their size.
“As firms start to show signs of stability, and in some pockets of the UK, growth, they need to remain prudent in order to prosper.”
Improvements led by the West Midlands
Figures for the West Midlands showed the rate of insolvencies were down to 0.07 per cent, a significant drop on last year when the rate was 0.12 per cent. It is now at the lowest rate since June 2007.
Scotland experienced the second biggest fall compared to October 2011 – from 0.08 per cent to 0.04 per cent – hitting its lowest rate of insolvency since November 2009. Quarter three of this year sparked a real turnaround for Scotland and the insolvency rate continues to fall into quarter four.
Sector view
Of the UK’s five largest industries – business services, IT, property, construction and the leisure and hotel industry – it was the hotel and leisure industry that made the most significant improvement with data showing a drop from 0.16 per cent in October 2011 to 0.12 per cent in October this year. This was despite the impact of a few high profile insolvencies. The industry has also seen a steady downward trend in insolvency rates, since March 2012 when it peaked at 0.21 per cent.
ENDS