Business insolvencies fall in April

New research has revealed that 1,564 businesses failed during April 2012, representing 0.08 per cent of the business population. In comparison, 1,808 firms failed in April last year, representing 0.10 per cent of the business population.

All areas of the UK saw their average financial health score improve – from an average of 83.24 in April 2011 to 83.76 during April 2012. The biggest improvement came from firms in Scotland – from 82.55 last April to 83.66.

Max Firth, UK Managing Director for Experian’s Business Information Services division, said: “Today’s figures show a more stable business environment, with some areas and sectors that have historically seen the highest rates of business failures moving in the right direction.

“Since January 2009, when the average financial strength score of UK firms had fallen to its lowest level recorded, there has been a definite and positive upward trend. Combined, these two valuable indicators show how UK businesses are faring and highlight areas where there are opportunities, as well as risks.”

For the second month in a row, firms in the North East have seen the biggest year-on-year improvement – from an insolvency rate[2] of 0.15 per cent in April last year to 0.09 per cent. The North East was also the region to see its insolvency rate improve the most from March 2011 to March 2012.

The March 2012 to April 2012 view also highlights the North East region as seeing the second most significant improvement – from 0.14 per cent in March 2012 to 0.09 per cent in April. The North West fared even better, seeing its insolvency rate drop from 0.14 per cent in March to 0.08 per cent in April.

The East Midlands and Scotland were the only two areas of the UK to see their insolvency rate increase compared to April 2011 – both rose from 0.07 per cent in April last year to 0.09 per cent.

The latest insolvency index also highlighted that medium sized firms, which have traditionally struggled the most, were the most improved during April. Businesses with 51 to 100 employees saw the biggest improvement from 0.22 per cent April 2011 to 0.10 per cent in April 2012. They were also one of the categories to see the biggest month-on-month fall – from 0.20 per cent in March.

Smaller businesses with 26 to 50 employees saw a similar month-on-month fall – from 0.24 per cent in March to 0.16 per cent in April.

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