UK insolvencies rise in February

Business failures increase in the IT industry, but pharmaceuticals is the worst hit, according to Experian

The IT industry saw an increase in the number of business failures in February as the overall number of insolvencies across the UK rose.

Figures released by market watcher Experian showed the rate of insolvencies during February 2012 increased to 0.10 per cent, up from 0.8 per cent in February 2011.

This increase was led by medium-sized and large firms (101 to 500 employees), which saw a year-on-year rise from 0.12 per cent in February 2011 to 0.17 per cent this year. Small firms – those with 51 to 100 employees – recorded the best performance for February, as insolvency rates fell from 0.20 per cent in 2011 to 0.10 per cent in 2012.

Average business strength scores also fell from 84.01 in January to 83.86 in February, but this was still better than the 81.60 recorded in February 2011.

Max Firth, UK managing director for Experian’s business information services division, said: “Although business insolvencies increased slightly in February, our data is showing that UK business balance sheets have been improving gradually since August. Any increase in insolvencies among medium and large business highlights a riskier environment, particularly for the smaller firms that supply to them.

“Our insolvency figures underline the importance for smaller businesses to take as much care as their larger counterparts do when checking the creditworthiness of suppliers and customers before doing business with them.”

In terms of verticals, pharmaceuticals experienced the biggest increase in insolvencies. The sector had a higher rate of insolvencies during February than any other. Of the UK’s five biggest industries – business services, building and construction, property, IT, and leisure and hotels – building and construction saw the biggest annual increase in its insolvency rate, said Experian.

In terms of regions, greater London and the South East saw the largest number of firms going bust of the 1,877 insolvencies recorded in February, with respectively 399 and 270, while Wales and the North East saw the fewest number of insolvencies in February, with respectively 54 and 62.