Most businesses are ‘riding out’ the credit crunch, according to new research suggesting tougher borrowing conditions have had little impact on corporate failures.
Credit information company Experian found that the majority of industry sectors have avoided an increase in business failures during the current global economic uncertainty.
Compared to 2006, there were 1,793 fewer business failures last year – a drop of nearly 9% across all sectors. In fact, only nine out of 34 industry sectors saw a rise in failures.
The worst hit industry was the agricultural sector, where business failures increased by 25%. The increase is being blamed on a combination of adverse weather, outbreaks of foot-and-mouth and bluetongue disease and problems with EU subsidy payments.
The biggest regional fall in business failures was in London. The capital saw a 30% drop. Only two regions saw an increase – Northern Ireland (25%) and Wales (3%).
Tony Pullen, managing director for Experian’s business information division, said:
“Given the widespread debate and speculation on the likely negative impact of the credit crunch on businesses, these figures are somewhat surprising.
“In fact, the credit crunch, more stringent lending terms, higher borrowing costs and general concern about the economy could be encouraging more vigilance and increased caution amongst business managers and owners with regards to cashflow, risk exposure and the customers they choose to deal with.”
© Crimson Business Ltd. 2008
