UK businesses face increasing failure rate

27 October 2006 – The UK’s plastic and rubber sector has had fewer failures in Q3 than during the same period last year, but the overall number for 2006 has increased, according to the latest figures from Experian’s Business Information division. There were 25 business failures in the third quarter of 2006, compared to 33 in Q3 of 2005. However, the number for the first nine months of 2006 was ahead of last year’s figure, standing at 110 against 98, an increase of 12.2%. Experian’s figures have come from the analysis of “adverse notices”, from Companies House, which indicate a company has “little or no chance of recovering to a normal status in the future.” These notices can include voluntary liquidations, compulsory liquidations, administration orders, receiverships and voluntary arrangements. The figures released by Experian’s office in Nottingham, UK, also reveal a general picture of business failure in the UK. In the third quarter of 2006, there was a fall of 4.1%, but the overall figure for the first nine months of 2006 is actually up on 2005 by 4.4%, and stands at 14,216 companies. When explaining the mixed message that these figures provide, Richard Lloyd, md of Experian’s Business Information division, said: “The UK suffered its biggest increase in business failures since 1999 during the first quarter of 2006. “The slowdown in the rate of business failure began during the second quarter and has continued with the latest quarter…at the same time, we are also seeing an improvement in the time it takes businesses, especially large businesses, to pay their bills.” The largest number of failures in Q3 for 2006 was 980, experienced in the business services sector, up 11.9% on last year.