UK business failure rate drops

The rate of UK businesses failing hit its lowest level last month since September 2008, according to research group Experian.

The Insolvency and Distress Index found that 0.09 per cent of UK business failed in August 2009, lower than July’s 0.11 per cent, and the lowest rate of the year so far. Insolvencies fell by 23 per cent (in comparison with July 2009) to 1,796.

The report also declared that smaller sized businesses (with five employees or less) were particularly resilient in August, with low insolvency rates and a higher than average improvement in their financial stability.

Rolf Hickman, managing director of pH, an Experian company, commented: “This latest data is encouraging. However, it is also important to remember that although the total number of insolvencies is close to the total number in the last recession, the insolvency rate is nowhere near as high. The underlying business population has also been growing at an increasing pace, so this needs to be taken into account in order to gain a realistic picture of insolvencies in the UK and the extent of any impact on the UK economy rather than simply looking at raw insolvency statistics. 



“Although it is too early to tell whether this is an indication of a more positive outlook, one thing is for sure: businesses are distinctly aware of the current environment and the need to be cautious in any business dealings. We have seen a significant increase in businesses monitoring the health of suppliers, customers and partners, as well as themselves, in order to ensure they do not suffer from the impact of another business becoming insolvent.”