Corporate failures at an all time high in 2005
Market watcher predicts figures are set to rise in 2006
Last year the UK experienced its highest number of corporate failures since 2002 and the upward trend is likely to continue in 2006, analyst Experian has predicted.
After falling for two years, corporate failures jumped by 11 per cent in 2005 to 18,122, with the retail and business services sectors particularly badly affected. However the IT sector saw no change in the number of failures last year, reporting 624 failures, the same as in 2004.
“We are forecasting that corporate failures will continue to rise in 2006 and so encourage businesses to ensure that they make the necessary checks on their customers, prospects and suppliers to ensure they are forewarned about any cash flow difficulties and possible failure," said Richard Lloyd, managing director of Experian’s Business Information division.
"By taking the necessary action at the right time, businesses can prevent themselves going the same way and bearing the brunt of another company’s business failure," added Lloyd.
During 2005, voluntary liquidations and compulsory liquidations, which account for 80 per cent of all corporate failures, rose by 7.4 per cent to 9,083 and 14.4 per cent to 5,493 respectively, said Experian.
Receiverships fell by 31.7 per cent to 621, while administration orders increased 44.3 per cent to 2,356.