Business failures rise slightly in 2011

Experian's latest set of figures shows a marginal rise in firms going bust, with failures actually dropping in the IT sector, compared with 2010

Despite tough economic times, business insolvencies rose only slightly in 2011, compared with 2010, according to the latest stats from Experian.

Some 1.1 per cent of the total business population - or 21,070 businesses - failed in 2011, representing a slight increase on the 1.03 per cent (19,818 failures) recorded by the market watcher in 2010.

In 2008 and 2009, the insolvency rates were considerably higher, reaching 1.16 per cent and 1.25 per cent, respectively.

The IT sector actually saw a 2.8 per cent drop in insolvencies for the year, although the financial strength score decreased from 83.49 to 80.18, according to Experian.

SMEs also fared better than their larger counterparts, the firm claimed. Greater London and the South East had the most business failures with 4,991 and 3,114, respectively, with the North West in third place with 2,539. The North East saw the least number of failures, with 611 for the year.

Max Firth, UK managing director for Experian's Business Information Services division, said: "Given the challenging economic climate in 2011, businesses in the UK were pretty resilient and this was reflected by the stable insolvency rate during the year.

"For businesses to improve their financial health and avoid insolvency, it is vital that they understand the risks they are exposed to and have strategies in place to protect themselves. By monitoring the performance of all current and potential clients, they can fully understand and prepare for the impact they could have on them if they failed."