No increase in UK insolvency rate for 12 months running

The latest Business Insolvency Index from Experian reveals that business insolvency rates in August 2013 fell from 0.09 percent in 2012 to 0.08 percent in 2013 marking the 12th month that the rate has remained stable or fallen.

In terms of regional trends, nine of the 11 regions saw their insolvency rate drop year-on-year, with the biggest fall coming from the North East, which went from 0.12 per cent last year to 0.09 per cent in August 2013. Even London, which has seen several months of increased insolvency rates, saw a fall from 0.10 percent to 0.08 percent – the first since March 2013.

Looking at insolvency rates by company size, the biggest falls were among companies with 51-100 employees, down from 0.19 percent to 0.14 percent. Larger businesses didn’t fare as well, having experienced increasing g insolvencies last month, this month the insolvency rate amongst companies with more than 501 employees rose again in August from 0.06 percent in 2012 to 0.17 percent this year.

Max Firth, Managing Director, Experian Business Information Services, UK&I says it hasn’t seen such a prolonged period of stability and improvement in insolvencies for a while: “The figures signal increasingly robust business population, which bodes well for growth. What is particularly significant is the biggest fall coming from 51-100 employee companies. It follows on from a strong year-on-year drop in July and will give more confidence to these mid-sized businesses that suffered the most during the recession.

“When times are good and businesses are looking to grow, safeguarding the supply chain through business monitoring is integral. Businesses need to ensure that they are alerted to any potential issues quickly so sufficient steps can be taken to reduce any potential impact on their business.”

The South West fared particularly well in August, with the lowest insolvency rate of all the regions at 0.05 percent, representing a drop both year-on-year (0.07) and also since last month (0.07). Yorkshire was the only region to see a slight increase compared to August 2012 (up from 0.08 percent to 0.09 percent). Scotland, which has enjoyed historically low rates for nearly eight months now, saw a rise from last month’s rate of 0.03 percent to 0.06 percent.

Of the UK’s largest five sectors, the Building and Construction industry again saw a year-on-year fall – from 0.17 percent to 0.12 percent – the tenth month in a row it has fallen compared to the previous year. Outside the top five, the insurance industry fared particularly well, with insolvencies down from 0.15 percent in August 2012 to 0.03 percent in August this year.