The latest Insolvency Index from Experian, the global information services company, reveals a significant drop in the rate of business insolvencies in January 2013, as it hits its lowest level since June 2007.
The data shows that 0.06 per cent of the business population (1,271 companies) failed in January 2013. This marks a fall from 0.07 per cent in January 2012 and down from 0.08 per cent 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 per cent in January 2012 to 0.14 per cent in January this year and 0.14 per cent to 0.07 per cent respectively.
The largest firms (those with over 501 employees) saw their average insolvency rate fall from 0.20 per cent in January 2012 to 0.15 per cent in January 2013.
The UK’s smallest businesses (1-2 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, Experian Business Information Services, UK & I said: “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 their trading environment.”
“Businesses who want to secure the right deals, contracts and finance in order to grow this year need to ensure they are in the best position possible financially; this means thinking about their own credit rating and assessing what it says about them.”
The most significant falls in insolvency rates stemmed from Scotland, with 0.03% of the business population failing. This follows the steady downward trend that Scotland experienced throughout 2012, followed by the North East, East Midlands and 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 per cent, while property and IT saw an increase on last year – from 0.04 per cent for property and 0.03 per cent for IT to 0.06 per cent.