Finance sector news
Failing business decline halted
28/9/2009The number of failing UK businesses declined by almost a quarter last month, according to a report.
The UK business failure rate, which has been seeing an upward trend since 2007, fell to its lowest level in August since September 2008. A total of 1,796 firms went insolvent in August, a 23% fall from July, said credit checking agency Experian. However, compared with August last year, the number of firms going insolvent was still up 11%.
Experian said 0.09% of UK firms failed in August, a slight increase on the 0.08 per cent recorded in August 2008. However, it was significantly lower than the 0.11 per cent recorded in July, and the lowest rate so far this year. Experian called the latest numbers 'encouraging'.
Experian's data also reveals a slight improvement in the financial solidity of the UK business population, as measured by its average 'distress index'. The index - which predicts the likelihood of a business failing in the near future, with 100 being the least likely to default and 1 being the most likely - had been on a slow downward trend since March 2008 when it stood at 82.24.
"It is too early to tell whether this is an indication of a more positive outlook," said Rolf Hickman, managing director of Experian subsidiary PH. "One thing is for sure - businesses are distinctly aware of the current environment and the need to be cautious in any business dealings."
The north-east of England saw the highest rate of insolvency during August - almost double a year earlier - while business failures in the North West and Wales were lower than a year ago. Experian said postal and telecommunications firms were struggling the most.
