Company failures at an all time high

The UK has experienced its fastest growth in the number of limited businesses failing, according to the latest figures from credit reporting firm Experian.

In the first three months of 2006, corporate failures increased by 15.3 per cent to 4,818 – the highest quarterly increase recorded since 1999.

In total, 4,818 companies failed during the first quarter of 2006, compared with 4,180 in the first quarter of 2005. Voluntary liquidations increased by 3.9 per cent over the same period, administration orders by 55 per cent, compulsory liquidations by 26.5 per cent and receiverships by 9.7 per cent. Only voluntary arrangements fell, by 24.2 per cent.

Richard Lloyd, managing director of Experian’s Business Information division, said: “This increase of 15.3 per cent is alarming. In 2004, the UK recorded the lowest number of corporate failures since 1998, but insolvency rates have now been rising at an increasing rate since the last quarter of 2004. These latest insolvency figures really reflect current market conditions and illustrate some of the threats that businesses, especially in certain sectors, are experiencing. "

“No region has bucked this trend. In fact, every UK region has seen an increase in the number of businesses failing, with all the fallout, including lost jobs, that entails.”

Of the 34 industries surveyed by Experian, 22 recorded an increase in business failures in the first quarter of 2006, including information technology up 39 per cent.
“Following the sharp rise in corporate insolvencies in 2005, we predicted that the increase would continue into this year, and we see no reason for the insolvency rate to slow down this year," concluded Lloyd.

laura_hailstone@vnu.co.uk