News release
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RECESSION’S BIGGEST CASUALTIES FOUND IN UK’S INDUSTRIAL
HEARTLANDS, ACCORDING TO LATEST REPORT FROM EXPERIAN
Nottingham, UK, 28 May 2009 – Whilst London is seen as the epicentre of the recession, the latest Insight Report from Experian sheds new light on the distance the recession’s shockwaves have travelled. Published today, Experian’s report reveals that the biggest casualties are to be found in the UK’s industrial and manufacturing heartlands, far away from the middle-classes.
Charlotte Hogg, Managing Director, Experian UK & Ireland, commented:
“Contrary to what some people initially thought, our analysis shows that this is certainly not going to be solely a middle-class recession. Whilst the epicentre was in London and the South East, the biggest aftershocks are being felt in the UK’s traditional industrial heartlands – where businesses and communities are not necessarily as well equipped to handle its effects and bounce back to recovery.
So far, the worst fallout from the recession is being experienced in the West Midlands and the North of England and the indicators suggest this is likely to continue. For example, manufacturing in the UK is projected to shed over 350,000 jobs between mid-2008 and mid-2010. Our analysis shows that people most susceptible to the recession are those where employment prospects look bleakest, in terms of rising rates of unemployment. These segments of the population comprise mostly low-skilled labour in low-paid manufacturing, largely concentrated in urban centres in the Midlands and the North.”
According to Experian’s Insight Report, consumer confidence across the UK in the economy and household finances are at levels not seen since 1991[1]. Sentiment in the West Midlands and the North West, areas in which employment prospects look bleak, is also lower than in London.
Business insolvencies: traditional industries bear the brunt
Since July 2007, two per cent of all UK businesses have failed and Experian’s report shows that failure rates today remain far lower than they were in the recession of the early Nineties. The spike in overall company insolvency rates (business failures as a percentage of the business base), observed in the previous recession has not appeared, and as of April 2009 stood at a third of its 1991 level.
Whilst London's finance sector has been impacted, with three per cent of firms going to the wall since July 2007, it is the manufacturing and construction sectors in the North and The Midlands that have been hardest hit.
The North-East is the biggest casualty so far, with almost six per cent of its manufacturing firms and nearly five per cent of construction firms having failed since July 2007. Over the same period, more than four per cent of manufacturing companies have disappeared from the West Midlands, the East Midlands, Wales and Yorkshire. The construction sector in the North West and the West Midlands has also lost more than four per cent of its firms.
At a national level, Experian’s analysis shows that firms employing between 10 and 100 employees are failing at the highest rate. Of major concern to trade and industry and policy makers, it is companies of this size that typically drive business growth and act as the hotbed for innovation in the UK. Firms employing 10 or fewer employees are weathering the storm the best, according to Experian’s report.
Charlotte Hogg commented: “On the whole, our report suggests that post-recession, the UK’s business landscape is unlikely to look hugely different. However, survival of the fittest means that the weaker firms will fall by the way side – particularly in sectors where there is an abundance of suppliers and organisations that are not able to differentiate themselves on price, loyalty and service fronts. The business base as whole is likely to emerge stronger and more stable – which is promising for those companies ready, willing and able to ride the recovery curve.”
Business failures since July 2007[2] |
||
Region |
Sector |
% of business population failing since July 2007 |
North East |
Manufacturing |
5.64% |
North East |
Construction |
4.78% |
West Midlands |
Manufacturing |
4.32% |
North West |
Construction |
4.29% |
Wales |
Manufacturing |
4.28% |
Yorkshire |
Manufacturing |
4.27% |
North West |
Manufacturing |
4.24% |
West Midlands |
Construction |
4.13% |
East Midlands |
Manufacturing |
4.02% |
North West |
Wholesale |
3.93% |
Financial stress: the regional picture
Experian’s analysis of insolvency and CCJ data reveals that people living in the North and the Midlands are experiencing the highest levels of financial stress. Nearly three per cent of the adult population of Yorkshire and the Humber, the North East, the West Midlands, the East Midlands and the North West became insolvent or incurred a CCJ in 2008.
Financial stress by region 2008[3] |
||
Region |
Count of CCJ & Insolvencies in 2008 |
Penetration of 18+ Adults |
Yorkshire and the Humber |
122,272 |
3.05% |
North East |
61,115 |
3.01% |
West Midlands |
120,545 |
2.87% |
East Midlands |
94,448 |
2.75% |
North West |
146,347 |
2.72% |
London |
147,785 |
2.46% |
Wales |
56,591 |
2.42% |
South West |
89,742 |
2.19% |
East |
96,466 |
2.19% |
South East |
132,296 |
2.05% |
Scotland |
51,915 |
1.27% |
Northern Ireland |
10,164 |
0.77% |
Charlotte Hogg commented: “Our report shows the devastating effect the recession is having on the heart of the UK’s traditional industries as well as its corrosive effect on local communities. Our data underlines why investment and policy-making needs focus on these heartlands to address resilience issues and help them recover while the South spearheads the recovery.”