THE North West showed the biggest improvement in cutting company insolvencies, new figures show today.
Business information group Experian published its 2012 Insolvency Index which showed that during 2012 there were 0.86% fewer UK businesses that failed compared with the previous year.
It also showed that 1.04% of the business population failed compared with 1.10% in 2011.
The year ended with December seeing 0.08% of businesses fail, compared with 0.11% in the same month during 2011 which represents the lowest rate seen in December since 2007.
Regionally, the North West fared the best, showing a 7.17% reduction in insolvencies against a year ago. Wales came closest with a 6.73% fall in failing companies.
However, the North East suffered the biggest increase in failures, with a 15.88% rise in insolvencies, followed by the East Midlands with a 5.15% rise.
The greatest improvement in the rate of insolvencies was seen by firms with between 51 and 100 staff – their insolvency rate fell from 2.22% in 2011 to 1.83% in 2012.
The only significant year-on-year increases in the rate of insolvencies came from the largest firms; all those with more than 500 employees, which saw an increase from 1.46% in 2011 to 1.61% in 2012.
Max Firth, managing director, Experian Business Information Services UK & Ireland, said: “Following the slight upturn in 2011, 2012 has seen the business insolvency rate fall and then remain stable throughout the year.
“In particular, firms that suffered most during the downturn were the ones to see the most significant improvements.
“The rate of insolvencies is significantly lower now than when it was at its peak in 2009 at 1.25%, but there is still a way to go before we reach the pre-recession rate of 2007, which stood at 0.97%.
“This is highlighted by the slight increase in insolvencies amongst larger businesses – which highlights the need for businesses to stay alert to changes which may affect them.
“Ongoing monitoring of all clients and suppliers regardless of size is essential, as the impact of larger corporate insolvencies can be felt down the supply chain.”
Looking at how different sectors were affected, of the UK’s five largest industries – business services, IT, property, construction and the leisure and hotel industry – the IT sector was the only one that saw signs of a difficult year, with insolvency rates up to 0.74% in 2012, having held its annual insolvency rate at 0.65% since 2010.
The property sector made significant improvements, falling from 0.91% in 2011 to 0.75% in 2012.
The hotel and leisure industry also showed improvements with the data showing a drop from 1.82% in 2011 to 1.77% in 2012.
Figures for the hotel and leisure industry dropped dramatically in quarter three and held at 0.39% in quarter four, possibly as a result of the Olympic and Jubilee summer.
There was also positive news for the building and construction and business services sectors, showing a drop in insolvency rates compared with 2011 of 0.06% and 0.03%, respectively.