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UK businesses record biggest improvement in financial strength since July 2008
Small businesses proving the most resilient
The Insolvency Index from global information services company Experian® revealed today that while the average business insolvency rate increased slightly in October, the UK’s business community as a whole is now at its strongest financially since July 2008.
The average financial strength score of active businesses reached 81.14 during October, up from 79.80 in October 2008. According to Experian, this indicates that businesses on the whole are in a stronger financial position than previously with a smaller chance of failure in the next 12 months.
The business insolvency rate rose from 0.09% in September this year to 0.10% in October, with 10 businesses in every 10,000 going under. This represents a slight improvement on October 2008 (0.11%).
Businesses with 1 to 2 employees remained the most resilient, Experian reports. 0.06% failed during October, and the sector also demonstrated the highest improvement in financial strength, which rose to 82.22, compared to 81.90 in September 2009 and 80.85 in October 2008.
Rolf Hickman, Managing Director of pH, an Experian company, said: “Throughout 2008, the average financial strength score had been seeing a downward trend, but 2009 has seen a reversal. The financial solidity of UK businesses has been improving over the year.
“This has impacted on the insolvency rate, which has remained fairly stable since July, with a slight increase in October. If the financial strength of businesses continues to improve, we could see insolvencies maintain a low level and even start to fall.”
The highest insolvency rates were among businesses with 11 to 25 and 26 to 50 employees (0.28% within both groups).
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