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2012 Fall in Business Insolvencies

While everything might seem a bit economically shaky at the moment, especially with the threat of a triple dip recession on the horizon, there is some good news to come out of 2012. The Business Insolvency Index from Experian has shown that during 2012 0.86% fewer UK businesses failed than the previous year – it’s not a lot, but it is an improvement!

While 2011 saw 1.10% of UK business ventures fail, 2012 saw 1.04% go under. The figures for December 2012 show the lowest rate of business failure in the last month of the year since 2007. This lower insolvency rate shows there is more stability within the business sector, with the rate of failure remaining basically flat (at around 0.25%) for each quarter.

Small to medium businesses have seen the biggest improvement. Firms with 51-100 employees saw the business failure rate drop from 2.22% in 2011 to 1.83% in 2012. This was followed by companies with 26-50 employees and those with 11-25 employees. The former saw an improvement of 0.38% with the latter strengthening by 0.25% less failures.

These figures might all be fractions of a percentage, but with so many small businesses in the UK it adds up to greater stability and a stronger small business sector. It was the largest firms who experienced an increase in insolvencies, those with over 500 employees, and unfortunately at the other end of the scale micro businesses with 1-2 employees also saw a slight increase.

Max Firth, Managing Director of Experian Business Information Services UK commented; “Following the slight upturn in 2011, 2012 has seen the business insolvency rate fall and then remain stable throughout the year. In particular, firms that suffered most during the downturn were the ones to see the most significant improvements.”

“Firms need to remain prudent in order to prosper. By sharing data with credit reference agencies, businesses can improve their own credit rating, which should also be regularly monitored to ensure businesses are in the best position to secure deals and finance as required.”

 

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