UK insolvency rate falls to pre-recession levels

Best figures since June 2007, says Experian

Despite the recent high-profile casualties in the IT channel, the overall UK insolvency rate has fallen to its lowest level for more than five years.

Just 0.06 per cent of the UK's business population succumbed in January, amounting to 1,271 firms, according to credit information firm Experian.

This compares to 0.07 per cent last January and is the lowest rate since June 2007, before the credit crunch hit home.

"Although January is typically a slow month for business insolvencies, the figures for January 2013 do show a marked decline in the insolvency rate, which in fact has hit its lowest level for over five years," said Max Firth, managing director for Experian Business Information Services, UK and Ireland.

"This follows a relatively stable 2012, which itself was an improvement on the previous year."

On the other hand, Experian's figures show that the insolvency rate in the IT sector doubled to 0.06 per cent, as 69 IT firms hit the wall compared with only 35 last January.

Mid-sized to large firms weathered the month particularly well, Experian added. The insolvency rate among companies with 26 to 50 and 51 to 100 employees dropped from 0.20 to 0.14 per cent and 0.14 to 0.07 per cent, respectively, on an annual comparison. Some 0.15 per cent of large firms with more than 501 heads perished, compared with 0.20 per cent last January. In contrast, the rate was generally flat among smaller firms.

January saw the collapse of channel giant 2e2, following on from Comet's demise in November and Firth warned that its raw data does not necessarily tell the full story.

"High-profile insolvencies so far this year show that it is still a challenging climate and businesses across all sectors and sizes need to adapt to changes in their trading environment," he said.