Significant fall in business failures

New figures from information solutions company Experian have revealed that in the first three months of this year, 430 fewer businesses failed than during the same period in 2006.

This shows signs of a recovery from 2006, when the UK recorded its highest annual number of corporate failures recorded since Experian began reporting on insolvency in 1997.

However, Jo Howard, marketing director for Experian’s Business Information division, warned that the signs might not be as good as they appear:

“This is the first fall in business failures during the quarter one period since 2004,” she said. “However, whilst this fall should be welcomed, it needs to be treated with caution as past trends have shown us that dips in insolvency are often the calm before the storm, with the following quarter characterised by higher insolvency rates.”

Voluntary liquidations (down 9.1%), compulsory liquidations (down 0.5%), receiverships (down 50.8%), administration orders (down 11.8%) and voluntary arrangements (down 16.8%) all declined during quarter one 2007. Administration orders fell for the first time since the introduction of the Enterprise Act in 2003.

Out of 34 industries reviewed, seven recorded an increase in corporate failure, two remained unchanged and 25 recorded a decline. The leisure and hotels industry was amongst the hardest hit, with a 14.8% increase.

© Crimson Business Ltd. 2007