Business insolvency rate remains stable in September

News release

 

Contact:
Serj Heera
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business insolvency rate remains stable in september

 

  • Businesses with 11 to 25 employees see a marked increase.
  • The North East, which has seen the highest insolvency rates since January 2007, sees the biggest improvement.  

 

Nottingham, UK, 19 October 2009 - The latest Insolvency Index from Experian®, the global information services company, today revealed that the average business insolvency rate[1] during September (0.09 per cent) remained constant on August levels – the lowest since September 2008.

 

The monthly index also revealed that the business population saw a year-on-year improvement in its financial solidity (from 80.20 in September 2008 to 80.79 in September 2009) as measured by its average financial strength score.[2] 

 

In contrast to the national trend, small businesses with 11 to 25 employees saw a marked increase in insolvencies during September.  The rate of insolvencies among these businesses rose from 0.21 per cent in September 2008 to 0.26 per cent in September 2009.  This was the biggest year-on-year increase seen by any business type.  It was also the biggest month-on-month increase (from 0.21 in August).

 

The total number of insolvencies within businesses of this size increased year-on-year by 19 per cent (43 more business failures than in September 2008) and month-on-month by 20 per cent (four more business failures than in August 2009).

 

Rolf Hickman, Managing Director of pH, an Experian company, said: “A flat insolvency rate in September coupled with a small improvement in the overall financial solidity of the business population is positive.  August can be a slow month for insolvencies, which may have explained the low insolvency rate, but the fact that the low rate has continued into September is a good sign.   

 

“Businesses with one to two employees alongside those with 501 employees or more, had the lowest insolvency rates.  However, for some of those businesses in between, the rate of failure is markedly higher.  In fact, over the past year businesses with 11 to 25 employees have particularly struggled, having seen among the highest insolvency rates. 

 

“Micro businesses are often more flexible and able to access capital from friends and family to enable them to ride out an economic storm, while large corporate businesses have achieved economies of scale and have greater access to funds from capital markets.

 

“All businesses should continue to exercise caution with regard to their risk exposure by monitoring the financial health of their customers and suppliers.”

 

Other key findings were:

  • Historically, the North East has seen the highest and most erratic insolvency rate (since the beginning of 2007, but during September it was the region to see the biggest improvement from August this year.  The insolvency rate fell from 0.20 per cent to 0.12 per cent in the North East.
  • Yorkshire’s financial strength score saw the biggest improvement – from 80.01 to 80.78.
  • Although Greater London saw an improvement in its level of financial solidity (from a financial strength score of 78.77 to 79.60), it is still the region with the lowest score compared to other regions.
  • Large businesses (with 501 employees or more) saw the biggest deterioration of their financial strength score (from 84.94 to 84.37).  However, these businesses remain the most resilient types overall, having consistently held the highest score each month, compared to smaller businesses. 
  • During September, businesses with three to five employees were the second most resilient business types and saw a slight improvement (from 81.87 in September last year to 81.88 in September this year).
  • Of the five biggest industries in Great Britain (Business Services, Property, Building and Construction, IT and Non-food retailing), the IT industry saw the greatest fall in insolvency numbers (down 23 per cent), while Building and Construction saw insolvencies increase by 1 per cent. 
  • Although the Printing, Paper and Packaging sector had the highest insolvency rate during September, it was among the sectors to see the greatest improvement since last year.  Its insolvency rate dropped from 0.61 per cent September 2008 to 0.30 per cent in September 2009.

 

Region

Insolvencies Sep 09

% change from Sep 08

% of business population failing Sep 09

% of business population failing Sep 08

Financial Strength

Score Sep 09

Financial Strength

Score Sep 08

Scotland

            49

- 23

0.04

0.06

     80.94

     80.88

North East

            46

- 26

0.12

0.16

     80.77

     80.13

North West

          215

                6

0.11

0.11

     80.15

     79.57

Yorkshire

          139

- 16

0.12

0.13

     80.78

     80.01

Wales

            43

- 20

0.08

0.10

     80.30

     79.78

West Midlands

          185

              14

0.12

0.11

     79.70

     79.29

East Midlands

          122

                7

0.11

0.11

     81.16

     80.48

Eastern

          153

                8

0.09

0.09

     81.90

     81.39

South West

          123

- 2

0.08

0.09

     82.17

     82.04

Greater London

          368

- 10

0.08

0.09

     79.60

     78.77

South East

          251

- 11

0.08

0.08

     82.13

     81.44

Unspecified

 

 

 

 

 

 

Grand Total

       1,694

- 5

0.09

0.09

     80.79

     80.20

Source: pH, an Experian company

 

Number of employees

Insolvencies Sep 09

% change from Sep 08

% of business population failing Sep 09

% of business population failing Sep 08

Financial Strength Score Sep 09

Financial Strength

Score Sep 08

1-2

          221

          192

0.05

0.05

     81.90

     81.20

3-5

          260

          250

0.12

0.10

     81.88

     81.87

6-10

          269

          270

0.21

0.20

     81.43

     81.10

11-25

          264

          221

0.26

0.21

     81.11

     81.00

26-50

          100

          101

0.21

0.20

     80.71

     80.66

51-100

            56

            71

0.21

0.26

     80.15

     80.10

101-500

            40

            51

0.15

0.19

     81.26

     81.25

501+

              7

            15

0.07

0.16

     84.37

     84.94

Unspecified

          477

          611

0.05

0.06

     79.91

     79.09

Grand Total

       1,694

       1,782

0.09

0.09

     80.79

     80.20

Source: pH, an Experian company

 

Sector

Insolvencies Sep 09

% change from Sep 08

% of business population failing Sep 09

% of business population failing Sep 08

Financial Strength

Score Sep 09

Financial Strength

Score Sep 08

Extractive Industries

            -  

- 100

0.00

0.33

     82.43

     82.09

Oil

              3

- 25

0.09

0.13

     85.72

     84.99

Building and Construction

          281

            1

0.17

0.18

     77.96

     78.04

Building Materials

              5

        150

0.13

0.05

     79.81

     80.08

Chemicals Industry

              2

        100

0.07

0.03

     81.80

     81.02

Diversified Industrials

            48

          23

0.22

0.17

     78.26

     78.13

Electricals

            14

            8

0.16

0.15

     79.74

     79.34

Engineering

            68

          15

0.18

0.15

     79.69

     79.34

Printing, Paper and Packaging

              8

- 50

0.32

0.61

     78.94

     78.49

Textiles and Clothing

            33

          18

0.24

0.19

     77.21

     76.34

Breweries

              1

  -

0.21

0.00

     80.23

     79.90

Spirits, Wine and Tobacco

            -  

-

0.00

0.00

     81.84

     82.03

Food Manufacturing

            13

          18

0.26

0.22

     78.33

     78.03

Pharmaceuticals

              1

-

0.11

0.00

     81.86

     82.13

Wholesaling

            83

- 1

0.13

0.12

     80.06

     79.63

Leisure and Hotels

          107

- 5

0.13

0.14

     78.27

     77.34

Media

            56

- 11

0.09

0.10

     80.63

     79.77

Food Retailing

              9

- 31

0.06

0.10

     78.00

     78.38

Non-Food Retailing

          102

- 3

0.12

0.13

     79.32

     78.77

Servicing/Repair

              4

- 73

0.05

0.17

     81.56

     80.95

Transport

            62

- 18

0.12

0.14

     77.71

     77.68

Utilities

              2

-

0.11

0.00

     80.48

     80.18

Postal and Telecommunications

              4

- 75

0.05

0.18

     76.29

     75.08

Agriculture, Forestry and Fishing

              8

- 43

0.04

0.07

     84.90

     84.45

Banking and Financial Services

            57

          -  

0.11

0.12

     84.89

     84.60

Health and Household

            -  

- 100

0.00

0.23

     80.09

     78.71

Business Services

          373

- 6

0.07

0.07

     80.97

     80.13

Hiring and Leasing

            24

          50

0.18

0.12

     80.58

     79.73

Property

          105

- 9

0.06

0.07

     83.89

     85.09

Other Services

            88

          10

0.05

0.05

     85.11

     84.41

Plastics & Rubber

            10

          11

0.17

0.15

     78.56

     78.34

Insurance

              6

- 45

0.05

0.09

     85.14

     85.11

IT

            54

- 23

0.05

0.07

     82.83

     80.41

Motor Traders

            42

            5

0.12

0.12

     79.58

     79.32

Unspecified

            21

- 32

0.02

0.02

     72.18

     70.38

Grand total

       1,694

- 5

0.09

0.09

     80.79

     80.20

Source: pH, an Experian company

 

 


[1] The insolvency rate is calculated by comparing the number of businesses that failed with the total business population in Great Britain.

[2] The financial strength score predicts the likelihood of a business failing in the next 12 months, with 100 being the least likely to default and 1 being the most likely.

 

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