By Daniel Hunter
The latest Business Insolvency Index from Experian, the global information services company, reveals that business insolvency rate has stayed at the relatively low level of 0.08 per cent for a whole quarter now - the first time since 2007 - suggesting a more stable trading environment and increased resilience to business failure.
There has been a steady improvement over the last two years, with the average insolvency rate over the last 12 months standing at 0.08 per cent, compared to 0.09 per cent for the 12 months to April before that.
Looking at insolvencies by company size, businesses at both ends of the scale experienced low insolvency rates in April. Companies with 1-2 employees remained low at 0.06 per cent — the same rate seen in March this year and April of 2012. In addition, the UK’s largest companies (those with 501+ employees) saw a below average rate of insolvencies at 0.06 per cent, falling from 0.12 per cent last month and from the 0.08 per cent recorded in April 2012.
There were also modest improvements from firms in the middle of the market in April, as companies with 26-50 employees saw their insolvency rate fall from 0.16 per cent in April 2012 to 0.14 per cent in April 2013. Firms with between 11-25 employees also saw improvements, with the insolvency rate dropping from 0.17 per cent in April last year to 0.16 per cent in April this year.
Max Firth, Managing Director, Experian Business Information Services, UK&I said: “We’ve seen that the insolvency rate has been decreasing for some time, but the fact that it is staying low is encouraging news. It’s particularly pleasing to see that companies at both ends of the supply chain are improving all the time. Small companies make up the lifeblood of the British economy, so it is good to see that they have relatively low insolvency rates. And at the larger end of the scale, the big firms have a significant effect on the whole supply chain, so to see fewer failures is promising and will no doubt boost confidence in both customers and suppliers.”
Once again, businesses in Scotland have the lowest rate of insolvency — now standing at an all-time low rate of 0.03 per cent for five months in succession.
Whilst many areas have seen little or minimal change in their insolvency rate compared to April 2012, firms across the North have seen improvements on last month, with the North West down from 0.12 per cent to 0.09 per cent, the North East falling from 0.12 per cent to 0.10 per cent and Yorkshire falling from 0.11 to 0.10 per cent.
Of the UK’s top five biggest industries, Building and Construction and Leisure and Hotels fell by 0.01 per cent compared to April last year. Other major industries that have seen big rate falls compared to April 2012 include both the food and non-food retail sectors.
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