Insolvency rate drops to 2007 levels

Posted on 4 Mar 2013

The number of business insolvencies has dropped significantly in January 2013, hitting its lowest level since June 2007, according to information services company Experian’s Insolvency Index.

The data shows that 0.06% of the business population (1,271 companies) failed in January 2013. This marks a fall from 0.07% in January 2012 and down from 0.08% 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% in January 2012 to 0.14% in January this year and 0.14% to 0.07% respectively.

The largest firms (those with over 501 employees) saw their average insolvency rate fall from 0.20% in January 2012 to 0.15% in January 2013.

Smaller 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: “The figures for January 2013 show a marked decline in the insolvency rate, which in fact has hit its lowest level for over five years. However, high profile insolvencies so far this year show that it is still a challenging climate.

“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.