Insolvency rates fall to three-year low

The rate of business failures has fallen to its lowest point since June 2007, according to the Insolvency Index from Experian.

The rate of insolvencies of UK businesses fell to 0.07% in January 2010, with seven in every 10,000 businesses going under compared to a rate of 0.09% in January 2009 and 0.11% in December 2009.

The leisure and hotels sector saw its rate of business failures decrease from 0.16% in January 2009 to 0.11% in January 2010.

Companies in the South-west were most resilient but overall the financial strength score, based on a business’s likelihood to fail in the next 12 months, saw an eight percentage point improvement from 79.46 in January 2009 to 81.16 in January 2010.

Businesses in Greater London saw the highest improvement in financial health from 77.85 to 80.02 but still remained the area with the lowest financial strength score, followed by the West Midlands.

The highest failure rates in January 2010 were among businesses of between 11 and 100 employees while smaller firms of only one or two employees had the lowest rate.  

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