The fall in the UK’s insolvency rate was led by businesses with 101 to 500 employees. Failure rates amongst these mid-sized businesses fell from 0.21 per cent in December to 0.10 per cent in January.
Experian’s latest Business Insolvency Index also highlighted an improvement in the financial health among businesses - from 83.73 in December to 84.01 in January.
While most business segments experienced comparable insolvency rates to those seen twelve months ago, the insolvency rate of firms with more than 501 employees reached 0.20 per cent in January, up from 0.07 per cent the year before.
Max Firth, UK Managing Director for Experian’s Business Information Services division, said: “The fall in the overall rate of insolvencies has taken it back down to the level it was at a year ago, which is certainly positive. January generally tends to be a good month, with many businesses benefiting from the Christmas trade. When coupled with steady improvements in the underlying financial strength of businesses, it means that we can entertain some cautious optimism for the months ahead.
“The latest data has, however, revealed an increase in the rate of insolvencies for the largest firms This highlights that despite a positive start to 2012, businesses of all sizes still need to understand the risks they are exposed to and have strategies in place to protect themselves.”
Regional differences
Regionally, firms in Yorkshire led the way with the biggest improvements – from an insolvency rate of 0.15 per cent in December to 0.09 per cent in January. This was followed by London and the South East, from 0.10 per and 0.11 per cent to 0.05 per cent.
The SME view
The insolvency rate improved marginally among micro businesses (one to two employees), but these businesses have continued to maintain the lowest insolvency rate overall. They also led the month-on-month increase in financial strength, from 84.74 in December to 85.03 in January.
The year-on-year improvement in financial strength, however, was led by firms with 51 to 100 employees, from 81.62 in January in 2011 to 85.57 in January 2012. This was followed closely by businesses with 11 to 25 employees followed by 26 to 50 employees – two of the groups that tend to struggle the most.