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Press Release

BUSINESS FAILURES CONTINUE TO RISE YEAR ON YEAR BUT THE INCREASE IN FAILURES SLOWS CONSIDERABLY QUARTER ON QUARTER THIS YEAR

SO HAS UK PLC HIT THE BOTTOM OF THE RECESSION?

Equifax Quarter 2 2009 Business Failures Report

www.equifax.co.uk

London, 15th July 2009 - Leading business information provider, Equifax, has released its Business Failures Report for the second quarter of 2009. As was the case with Quarter One, the year on year comparison is stark, with an overall increase in businesses going bust hitting nearly 40%. But Neil Munroe, External Affairs Director, Equifax, believes this does not tell the more relevant picture of how UK businesses may be starting to recover from the sharp downturn which kicked in from mid last year.

"Whilst the year on year figures are pretty stark this is not surprising - in Quarter Two last year the downturn had only just started to hit companies. But I believe it is actually more relevant to look at how businesses are faring quarter by quarter this year. Our figures show that overall there was only a 2.2% increase in businesses going under in Quarter 2 compared to Quarter 1 and a number of sectors and regions actually showed a drop in failures for the period.

"Undoubtedly the recession is still having an enormous impact on business fortunes with many organisations simply unable to survive against the onslaught of falling sales and restricted access to funding to cover the cash flow gaps. But our figures seem to suggest that we could have hit the bottom by the time we reached the end of the second quarter and in some areas there is an improvement, albeit small.

"Of course the next question has to be whether we are going to see the sustained upturn of a V shaped recession or whether this is just a small pre-summer blip and failures increase again, more typical of W shaped recession."

Equifax's latest Business Failures Report follows other signs that the impact of the recession may be starting to lessen, with the British Chambers of Commerce releasing a survey at the beginning of the week that suggested an upturn in confidence amongst British businesses.

The Regional Picture

The overall picture for Business Failures for Quarter 2 compared to Quarter 1 suggests that whilst some regions are struggling, overall the pace of failures has slowed considerably. Indeed, whilst although all regions apart from Scotland showed a year on year increase in failures, when comparing the performance of Quarter 2 to Quarter 1, 4 regions actually showed a decreases in companies going under. And no regions showed increases in numbers of more than 10%.

In particular, the North East and Wales showed positive signs of recovery with 14.4% and 10.3% drops in the number of failures for Quarter 2 compared to Quarter 1, although these figures must be put in the context that there were a relatively small number of failing businesses in each region overall. Yorkshire & Humberside and the North West also saw drops in failures from Quarter to Quarter of 5.3% and 3.5% respectively.

However, even in the regions where there were increases these were considerably lower than in Quarter 1 compared to the end of 2008. Both London and the West Midlands saw increases Quarter on Quarter of 9.4%; failures in the South West rose by only 1.9% and in the South East by 1.8%.

Retail sector shows positive signs

The sectors that were hit the earliest and hardest in the recession appear to be starting to turn the corner now, according to Quarter on Quarter comparisons from the Equifax Business Failures Report.

The Retail sector has shown the greatest improvement with an 11.8% Quarter on Quarter drop in failures. The Wholesale sector has also improved Quarter on Quarter with a 5.1% drop in businesses going under and a 4.1% drop in failures seems to suggest the Construction sector is also starting to recover. Transport & Communications saw a 4% drop in failures Quarter on Quarter.

The only sectors which still seem to be struggling are Services with a 10.9% increase in failures Quarter on Quarter and Manufacturing at 2.9%.

"It would be immensely dangerous to get carried away from one quarter's figures" confirmed Neil Munroe. "But we firmly believe the Equifax Business Failures Report continues to provide a useful benchmark to watch in the coming months.

"It is also crucial that those businesses that are holding their own take the right precautions to protect themselves from some of the risks of these exceptionally tough trading conditions. They need to continue to use rigorous credit checks, alongside ongoing monitoring of the financial status of their customers and suppliers. By operating best practice and harnessing the power of the latest risk management solutions, firms can minimise the threat of bad debt and secure the future of their business."

ENDS

For interviews with Neil Munroe, or further press information please contact: Cecile Stearn, Margot Tomkinson, Jenny Staniforth or Wendy Harrison at HSL on 020 8977 9132 / Fax: 020 8977 5200 or Email: margot@harrisonsadler.com

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