The latest Insolvency Index from Experian reveals a significant drop in the rate of business insolvencies in January 2013, its lowest level since June 2007.
The data shows that 0.06 percent of the business population (1,271 companies) failed in January 2013. This marks a fall from 0.07 percent in January 2012 and down from 0.08 percent at the end of last year.
The UK’s mid-sized firms saw the biggest fall in insolvency rates in January 2013, as businesses with between 26-50 employees and 51-100 employees experienced a fall from 0.20 percent in January 2012 to 0.14 percent in January this year, and 0.14 percent to 0.07 percent respectively.
The largest firms (those with over 501 employees) saw their average insolvency rate fall from 0.20 percent in January 2012 to 0.15 percent in January 2013.
The UK’s smallest businesses (one to two employees) saw a slight fall in the insolvency rate compared to figures at the end of last year; however, the picture for businesses with less than 10 employees remains broadly flat.
Max Firth, Managing Director of Experian Business Information Services for the UK and Ireland, says that although January is typically a slow month for business insolvencies, the figures for January 2013 do show a marked decline in the insolvency rate, which in fact has hit its lowest level for over five years: “This follows a relatively stable 2012, which itself was an improvement on the previous year.
“High-profile insolvencies so far this year show that it is still a challenging climate and businesses across all sectors and sizes need to adapt to changes in the trading environment.”
The most significant falls in insolvency rates stemmed from Scotland, with 0.03 percent of the business population failing. This follows the steady downward trend that Scotland experienced throughout 2012, followed by the north east, the East Midlands and the West Midlands.
Of the top five biggest sectors, it is a mixed picture with building/construction and leisure/hotels seeing modest falls on January 2012’s figures. Business services held firm at 0.06 percent, while property and IT saw an increase on last year – from 0.04 percent for property and 0.03 percent for IT to 0.06 percent.