UK insolvencies drop in November

Experian study reveals Scotland has lowest insolvency rate in the UK, and firms with one to two employees are performing well

Closed for business: The number of firms falling into insolvency slowed last month

The number of UK firms going bust in November has continued to fall and the financial strength of businesses has also improved, market watcher Experian has claimed.

Firms across the UK saw an improvement in their financial strength score from 79.66 in November last year, to 81.26 in November 2009. The rate of insolvencies fell to 0.09 per cent last month, compared to 0.11 per cent in November 2008.

Businesses in the South West were the most robust according to Experian, holding the best financial score during November. The South East continues to have the highest rate of failures compared to other regions, despite its insolvency rate falling from 0.16 per cent in 2008 to 0.13 per cent in 2009.

Rolf Hickmann, managing director of pH, an Experien company that oversaw the research, said: “The last four months have seen a fairly low and stable rate of insolvencies, compared to 2008, and certainly compared to the heights reached in the last recession in 1992.

“In fact the overall picture shows a very gentle decline in insolvencies throughout the year. Furthermore the latest improvement in the financial health score is the fifth month in a row that the health of businesses has improved.”

Hickmann added: “Despite the prolonged recession, the UK’s entrepreneurial spirit continues to thrive. The number of micro businesses – those with one to two employees – is growing rapidly. They are enjoying the lowest rates of insolvency and are relatively secure.”

Other results included: Scotland continues to enjoy the lowest rate of business failures at 0.04 per cent and businesses in the Yorkshire region improved the most during November.

In the capital, London businesses had the lowest overall financial strength compared to other regions, but businesses in Greater London saw the second highest improvement in their financial health.

The highest insolvency rates during November 2009 continued to be among businesses with 11 to 26 employees and the larger firms – those with over 501 employees, had the best financial strength score.