Business Failures Lowest Since September 2008
By Golnaz Alibagi 21 Sep 2009
The number of business failures in the UK reached its lowest level in August, suggesting the instances of closures – which have been rising steadily since 2008 – could have hit a plateau, according to recent statistics from global information services company, Experian.
The findings show that the total number of insolvencies last month were 23% lower than those recorded in July and only 11.3% more than those registered at the same time last year. However, despite revealing the lowest rate of monthly failures so far this year, the statistics still make worrying reading – revealing that a total of 1,796 businesses went bust in August alone.
Interestingly, small businesses were found to be the most resilient enterprises, with insolvency rates falling to just 0.05% for companies with one or two employees, and 0.12% for those with between two and five members of staff. Smaller-sized companies also achieved a higher than average improvement in their financial stability – averaging at 81.32% for businesses with up to two staff and 82.58% for those between two and five.
Rolf Hickman, managing director of Experian company, pH, comments, “This latest data is encouraging. However, it is important to remember that although the total number of insolvencies is close to the total number in the last recession, the rate is no where near as high.”
He adds, “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.
“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 dealings. We have seen a significant increase in companies monitoring the health of suppliers, customers and partners, as well as themselves, in order to ensure they do not suffer from the impact of other business becoming insolvent,” he adds.