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Insolvency rate among SMEs falls

Published On 17 April 2007 at 14:44:02

There has been a significant drop in the number of businesses going out of business in the UK in the first three months of the year, a new report says.

According to Experian, a global information solutions company, corporate failures have fallen by 8.8 per cent in the period when compared to the quarter in 2006.

In total 430 fewer companies, including some small and medium-sized enterprises (SMEs), went out of business in the three month period than did over the same time last year.

"This is the first fall in business failures during the quarter one period since 2004," said Jo Howard, the marketing director for Experian's business information division.

"However, whilst this fall should be welcomed, it needs to be treated with caution as past trends have shown us that dips in insolvency are often the calm before the storm, with the following quarter characterised by higher insolvency rates."

Experian's research also revealed that there were significant regional variations in the trends in business insolvency - northern areas showed increasing insolvency rates while London and the south saw their figures tumble.

More businesses could face insolvency in the future as rising inflation makes it seem more likely that the Bank of England will decide to increase interest rates in the near future.

"The insolvency warning signs can often be seen well in advance, but all too often, businesses fail to look," Ms Howard concluded.

 

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