Signs of business failure divide

cashInsolvency figures have revealed businesses in the South are fairing "far better" than their counterparts in the North of England.

The growing signs of a business failure divide emerged in an Experian study showing insolvency rates decreased in London and the South East between October and November but increased in the North East, North West and Yorkshire.
A total of 1,736 businesses failed in the UK in November, with the North West topping the table for highest insolvency rates, with 0.14% of businesses in the region, a total of 265, failing. In the North East, 0.12% (49) of businesses failed and in Yorkshire 0.11% (134) failed.

Meanwhile, the South East of England registered a lower insolvency rate, with 0.07% of businesses (230) having failed, with the South West (121) and Greater London (371) both registering rates of 0.08%.

Figures for Scotland show that while the number of insolvencies is down by 6.9% since November 2010, the percentage of the business population failing remains unchanged from last November's 0.07%, suggesting that the number of businesses have probably decreased.

Although there was a decrease since October overall in the UK, with the rate of insolvencies going from 0.10% of all businesses in October down to 0.09% in November, this was an increase on the rate of 0.07% for the same period last year.

The average financial strength of businesses throughout the UK suffered a blow between October and November, deteriorating by 0.5% to 78.07, while in the same period last year it stood at 81.31.

This credit score is based on financial figures and ratios from filed accounts at Companies House as well as non-financial indicators such as recent payment history and the existence of a mortgage.

Smaller businesses, with between three and 10 employees, incurred the greatest hit to their financial strength in the last year with an average score of 81.80 in November 2010 falling to an average of 81.04 in November.

Max Firth, a managing director at Experian, said: "The latest insolvency index highlights that some businesses continue to need to assess the risk strategies they have in place very carefully. They need first to understand the risks they are exposed to and then protect themselves from debt that could be detrimental to their business on a regular ongoing basis."

© 2011 Press Association
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