Insolvencies fall again year-on-year, North East sees biggest fall

Posted on 23 Jul 2013

Mid-sized companies and the North East see the biggest drop in their insolvency rate, according to Experian’s latest insolvency index.

The overall business insolvency rate for the UK fell to 0.07 per cent in June from 0.08 per cent in June 2012, as revealed by the latest Business Insolvency Index from information services company Experian.

In spite of the marginal fall, it is the second consecutive month that the rate has fallen year-on-year. In May the rate was down from 0.09 per cent in 2012 to 0.08 per cent.

Most regions have showed continued improvement. In May, seven out of 11 UK regions surveyed showed a year-on-year fall in their insolvency rate – in June this increased to eight regions.

Outside Scotland, the North East saw the biggest turnaround since last year – falling from 0.13 per cent in June last year to 0.08 per cent in June 2013.

Small to medium sized businesses, which suffered the most during the recession, performed well in avoiding insolvency in June.

Companies with 6-10 employees, which saw the biggest fall in May, again saw an improvement in June with their insolvency rate going from 0.17 per cent in June 2012 to 0.13 per cent in June 2013.

This fall is matched by companies with 10-25 employees, whose insolvency rate fell from 0.19 per cent to 0.15 per cent.

Max Firth, Managing Director, Experian Business Information Services, UK&I said: “We’ve already seen several months of low but level insolvency rates and the fact they have come down further indicates that firms are operating with more confidence than in recent years.

However, he warned “As businesses start to think about growth and companies start to restock and rehire, the insolvency rate could well go up as cash flow becomes an issue,” suggesting companies pay more attention that normal to cash flow.

Outside Scotland, the North East seeing the biggest fall in its insolvency rate and Yorkshire’s rate decreasing from 0.13 per cent in June 2012 to 0.10 per cent in June 2013.

Of the UK’s top five biggest industries, the building & construction industry saw yet another year-on-year fall with its insolvency rate down from 0.17 per cent in June 2012 to 0.12 per cent in June 2013.

Source: pH, an Experian company