Small business failure rates plummet

Insolvency down year-on-year, finds report

The health of the UK’s micro and small business community improved in April this year, with the number of firms claiming insolvency down by 0.55%, according to a new study.

Global information services company Experian’s latest Insolvency Index, revealed that, out of 1,808 UK companies, just  0.10% of the active business community became insolvent in April 2011, compared to 1,818 in the same period last year.

The research shows that year-on-year, business failures fell at a faster rate across the majority of small business sectors, with the most notable reductions among the three to five (17.04% fewer) and 26 to 50 (24.59% fewer) employee organisations.

Failures among medium-sized firms (101 to 500 employees) increased by 4.44% year-on-year, while large company insolvencies (500 plus employees) rose by 9.09%.

Max Firth, managing director of Business Information Services at Experian said: “With business failure rates and financial strength fluctuating across different regions and sectors, it is especially important that any organisation extending credit to, or relying on, other businesses for goods and services is able to understand the level of risk associated with their commercial partners.”

The biggest improvements in business failures were recorded in the Midlands and Wales. Declines of 19.07% in the west Midlands and 17.54% in Wales were topped only by the east Midlands, where insolvencies fell by 36.21% year-on-year. The east Midlands saw just 0.07% of firms fail in April.

Meanwhile the east, south east and north east of England saw failures increase by 26.16%, 14.68% and 13.73% respectively year-on-year, and  0.15% of the north east’s business population failed in April – a higher rate than any other region.

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