Failure rates improve amongst UK?s small business community

The health of the UK’s micro and small business community improved in April, according to Experian’, the global information services company.

Experian’s latest Insolvency Index, published today, reveals that 1,808 UK companies, 0.10 per cent of the active business community, became insolvent in April 2011, 0.55 per cent fewer than the same period in 2010 (1,818).

Failures fell at a faster rate across the majority of the smaller business segments year-on-year, with the most notable reductions amongst the three to five (17.04 per cent fewer) and 26 to 50 (24.59 per cent fewer) employee organisations.

Failures amongst medium sized firms (101 ’ 500 employees) increased by 4.44 per cent year-on-year, while large company insolvencies (501+ employees) rose by 9.09 per cent. Despite this, medium and large companies continue to have amongst the lowest failure rates, with just 0.18 per cent and 0.13 per cent of firms in these segments failing during April compared to the previous month.

Regional trends

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

The East, South East and North East of England saw failures increase by 26.16 per cent, 14.68 per cent and 13.73 per cent respectively year-on-year. 0.15 per cent of the North East’s business population failed in April, a higher rate than any other region.

Property sector hard hit by business failures

The property sector saw a significant 70.37 year-on-year increase in business failures during April. 184 property firms failed, representing 0.12 per cent of the sector. There were, however, notable improvements in failures amongst diversified industrial (47.54 per cent fewer), wholesale (31.11 per cent fewer), media (15.38 per cent fewer) and motor trade (13.79 per cent fewer) businesses.

Max Firth, Managing Director of Business Information Services at Experian UK & Ireland, comments: ’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.’