UK firms regain financial strength

Insolvencies could start to fall as financial strength of UK businesses rises to 15-month high

Insolvency rate could fall, Experian predicted

The UK business community is at its strongest financially since July 2008, according to Experian.

Active UK businesses had an average financial strength score of 81.14 per cent in the information services firm's October Insolvency Index. This is the highest level for 15 months and indicates that UK firms' chance of failure over the next 12 months is falling.

The business insolvency rate rose from 0.09 to 0.1 per cent in October, with 10 businesses in every 10,000 going under. That is also an improvement year on year as the rate in October 2008 stood at 0.11 per cent.

The average financial strength score of businesses in the IT sector rose from 79.74 to 83.35 per cent year on year. The number of insolvencies in the sector also fell 2.5 per cent year on year to 77.

Rolf Hickman, managing director of pH, an Experian company, said: “Throughout 2008, the average financial strength score had been seeing a downward trend, but 2009 has seen a reversal. The financial solidity of UK businesses has been improving over the year.

“If the financial strength of businesses continues to improve, we could see insolvencies maintain a low level and even start to fall.”