Press Release

BUSINESS FAILURES DROP QUARTER ON QUARTER ACROSS THE UK FOR THE FIRST TIME FOR OVER A YEAR

13.5% drop in Quarter on Quarter failures suggest that UK economy is turning the corner

The Equifax Quarter 3 2009 Business Failures Report

London, 13th October 2009 - Leading business information provider, Equifax, has released its Business Failures Report for the third quarter of 2009. Although year on year, there are still increases in failures in most sectors and regions of the UK, the number of businesses going under in Quarter 3 has dropped in every part of the country and every business sector compared to Quarter 2. Neil Munroe, External Affairs Director, Equifax, believes this is a definite sign of the UK economy picking up from the sharp downturn which kicked in from mid last year, but is also adding a word of caution.

"Certainly the rate of failures in businesses has slowed down from the very high year on year increases we were seeing at the end of 2008 and in the early months of 2009" said Neil Munroe. "But, of course, what we must remember is that we are now comparing numbers with those at the back end of last year when failures were already on the rise.

"I think it is more significant that Quarter on Quarter the numbers of businesses failing is on the decline. This is by 13.5% overall and in some areas by as much as 25%. Indeed this is the first Quarter for over a year when we have seen every region of the country and every business sector report a drop in failures. And this must give businesses in general and the UK economy as a whole some confidence that the extreme difficulties we have been experiencing may be lessening.

"However, we must remember this is just one Quarter and we need to see consistent improvements over a number of Quarters before we can be fully confident that we are out of the recession. And, as has already been stated by a number of economic commentators, it is crucial that these early signs of recovery are not over-stated. The worst thing that could happen now is that organisations take their eye off the ball in terms of good risk management and find themselves in trouble simply because they didn't do all the right checks of new and existing customers to make sure they don't suddenly find themselves with bad debts on their books."

The Regional Picture

The overall picture for Business Failures year on year shows that whilst numbers are still up compared to Quarter 3 2008, the increases are not as high as has been seen earlier in the year. And looking at the figures for Quarter 3 compared to Quarter 2 the rise in failures been stopped completely.

Indeed, some regions have had a very significant drop in businesses going under in Quarter 3 compared to Quarter 2. Both Wales and the North East have shown drops of over 25% and only the North West, Scotland and Yorkshire and Humberside have recorded declines in failures in single figures.

Wholesale sector shows the most positive signs Quarter on Quarter

Every business sector has shown a downturn in businesses going bust in Quarter 3, compared to Quarter 2 2009, with the Wholesale sector performing the best at 19.4%. However, Construction, Manufacturing, Services, Retail and Transport & Communications all also recorded drops in failures in double figures which should give huge encouragement as the economy heads into the last quarter.

"Businesses right across the UK and across every sector take real encouragement from these figures", concluded Neil Munroe. "But they must also continue to take the right precautions to protect themselves from some of the risks of these continuing difficult 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."

Click here for figures and year on year and quarter on quarter percentages.

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