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UK business community at its strongest since last summer

Published: 24 November 2009
Latest Insolvency Index reveals that businesses are in a stronger financial position, with a smaller chance of failure in the coming year.
UK business community at its strongest since last summer
The Index from Experian revealed 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. However, this still represents a slight improvement on October last year, when the insolvency rate was at 0.11%.

Smaller businesses, with one to two employees remained the most resilient, with only 0.06% failing during October. Firms in this category also demonstrated the highest improvement in their financial strength score during last month, up to 82.22.

Experian company, pH's managing director Rolf Hickman 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... If the financial strength of businesses continues to improve, we could see insolvencies maintain a low level and even start to fall."

The Index also revealed that the South West was the only region in the UK to see a year-on-year fall in the insolvency rate, while all others saw an increase. Yorkshire had the highest insolvency rate of any region and saw the highest month-on-month increase.

The highest insolvency rates were among businesses with 11 to 25 and 26 to 50 employees, while businesses with more than 501 employees had the best financial strength score during October but were the only business type to see a year-on-year deterioration, from 84.92 in October 20008 to 84.67 in the same month this year.

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