By Daniel Hunter
The latest Business Insolvency Index from Experian, the global information services company, reveals positive news for the economy as the overall business insolvency rate fell to 0.08 per cent in July from 0.09 per cent in July 2012.
This is the third consecutive month that the rate has fallen year-on-year — the first time this has happened since 2010. Although the rate is marginally higher than in June (when 0.07 per cent of the business population failed), the longer term trend shows a steady and continuing decrease in insolvency rates.
Around the UK, many regions performed better than the same month last year. The insolvency rate either dropped or stayed level in nine out of 11 regions compared to July last year. Outside of Scotland, Yorkshire and the West Midlands showed the biggest yearly improvements.
Looking at insolvencies by company size, there were no significant rises amongst smaller companies with up to 100 employees (representing the vast majority of British businesses). Within this group however, businesses with 50-100 employees saw the biggest drop in their insolvency rate from 0.16 per cent in July 2012 to 0.13 per cent in July 2013. Companies with 0-2 employees (representing over 1.5 million small companies) experienced a considerable drop in insolvencies; from 0.07% in July 2012 to 0.06% in 2013.
At the other end of the scale there has been another rise in insolvencies amongst the UK’s largest companies (501+ employees) from 0.08 per cent in 2012 to 0.15 per cent this year.
“A whole quarter of dropping insolvency rates is really positive news, but the fact that larger companies have seen quite a rise shows that we are not out of the woods yet, especially as this can trickle down the supply chain to smaller companies," Max Firth, Managing Director, Experian Business Information Services, UK&I said.
“Business owners need to remain vigilant and ensure that they have monitoring systems in place, however simple, to ensure they know the financial status of their customers and their suppliers and are able to act quickly if one of them gets into difficulty.”
Scotland maintained its low insolvency rate of 0.03 per cent for the eighth month running. Outside Scotland, companies in Yorkshire saw a drop in insolvencies compared to July last year from 0.11 per cent of the Yorkshire business population to 0.09 per cent — making this the eighth month that the region has seen a year-on-year fall. A similar drop was seen in the West Midlands, from 0.11 per cent to 0.09 per cent.
Only companies in London and the South East showed a slight rise in their insolvency rate.
Join us on