Business failures fall by a third

UK business insolvency rate continues to improve in July, according to Experian

Ray of hope: SME failure rates are improving but there is still uncertainty at top end of the market

Business insolvencies are continuing to fall with the July figure seeing a 33 per cent decline in firms going bust, according to Experian.

A total of 1,542 UK firms failed last month, compared with the 2,312 that failed in July 2009.

In the IT sector there were 55 insolvencies last month compared with 75 in 2009.

The financial strength score of UK businesses last month was also marginally higher than the 80.61 recorded in July and an increase on the 80.83 in June. However it is still below the 12-month high of 81.37 recorded in December last year.

Most business segments saw insolvency rates fall year on year with the biggest improvements among companies with between 101 and 500 employees. This segment saw a 56 per cent drop in insolvencies last month. The larger players (over 500 employees) were the exception with insolvency rates actually increasing in July.

Max Firth, managing principal of pH, an Experian company, said: "July's data indicates that the SME population is faring much better in terms of insolvencies than it did this time last year. However, increasing failures at the top end of the market demonstrates clearly that there is a still a great deal of uncertainty.

“Given this ever-changing picture, it is vital that organisations ensure they understand and proactively manage the risk that those they do business with exposes them to,” he said.

In terms of regions, Scotland overtook the South East as the region with the lowest insolvency rate (0.05 per cent). The North East and Wales saw the biggest improvements with insolvency rates halving and improvements in the North East meant it is no longer the worst-performing region.

Greater London continues to be the region where businesses had the lowest financial strength score at 79.75, Experian said.