By Marcus Leach

The latest Insolvency Index from Experian, the global information services company, reveals a widening 'North versus South' business failure divide, with southern firms faring far better than their northern counterparts.

London and the South East of England saw insolvency rates decrease between October and November, while company failures increased in the North East, North West and Yorkshire.

During November, insolvency rates were highest in the North West (0.14 per cent), North East (0.12 per cent) and Yorkshire (0.11 per cent). By comparison, the South East, South West and Greater London recorded failure rates of 0.07 per cent, 0.08 per cent and 0.08 per cent respectively.

Across the country, there was a small month-on-month improvement in the rate of business insolvencies, from 0.10 per cent in October to 0.09 per cent in November. Out of the UK’s business population, this represents 1,736 firms failing in November. In November 2010, the insolvency rate 0.07 per cent.

The average financial strength of businesses in the UK deteriorated by 0.5 per cent in November, falling to 78.07 from 78.44 in October. In November 2010, the average financial strength score was 81.31.

“The latest insolvency index highlights that some businesses continue to need to assess the risk strategies they have in place very carefully," Max Firth, Managing Director for Experian’s Business Information Services division in the UK & Ireland, said.

"They need first to understand the risks they are exposed to and then protect themselves from debt that could be detrimental to their business on a regular ongoing basis.”

The UK’s biggest sectors

Of the five biggest industry sectors — business services, building/construction, property, IT and leisure/hotels — property was the only one that saw its improving insolvency rate improve - from 0.07 per cent in November 2010 to 0.06 per cent November 2011. It was also the sector to see the biggest improvement from October when the rate was 0.08 per cent.

Small to medium sized enterprises

Although smaller businesses (with 3 to 10 employees) have generally managed to maintain lower rates of insolvencies over the past year, they experienced the biggest deterioration in financial strength between November 2010 (an average of 81.80) and November 2011 (an average of 81.04).

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