Press Release

YEAR ON YEAR BUSINESS FAILURES INCREASE BY 35% BUT COULD SPEED OF FAILURES BE SLOWING DOWN WITH ONLY 3.3% INCREASE ON QUARTER 4 2008

Equifax Quarter 1 2009 Business Failures Report

London, 3rd April 2009 - Leading business information provider, Equifax, has released its Business Failures Report for the first quarter of 2009. The comparison with the same period in 2008 is stark with an overall increase in businesses going bust of 35%. Neil Munroe, External Affairs Director, Equifax, does not believe this figure will surprise many. But what may be more encouraging is when the Quarter 1 figures are compared with the more recent Quarter 4 2008 numbers - where an increase of just 3.3% is reported.

"It is hardly surprising that year on year the level of failures has increased so significantly" explained Neil Munroe. "At the beginning of last year we were only just starting to see the impact of the credit crunch and certainly the word 'recession' had not yet been uttered. But obviously things have been very different at the start of this year with consumer confidence really struggling to lift. However, what we do seem to be seeing is a slow down in what was a run-away train of failures at the end of last year. Compared to Quarter 4, there has been just a 3.3% increase in the number of failures and some sectors and regions of the country have even recorded a drop in businesses going to the wall. It would be immensely dangerous to take too much from just one Quarter's performance, but it is a useful benchmark to watch in the coming months.

"But the bottom line is that our latest figures reinforce the fact that the variety of Government and private sector initiatives still have a long way to go in helping stimulate confidence in the business community. Indeed, there is a risk that as we head into the new tax year we might even see the numbers creep up again as some businesses find it impossible to stay ahead of their creditors including the tax man.

The Regional Picture

Around the country the overall picture for Quarter 1 is gloomy with only Scotland managing to maintain the theme it set at the end of last year with a drop in failures year on year of 18.6%.

The North East saw the biggest percentage rise in failures year on year at a phenomenal 82.9%, but this must be put in the context that there were a relatively small number of failing businesses in that region overall. However, the regions where there are overall higher numbers of businesses failing also saw significant increases year on year including the South East at 47.5%, the North West at 41.1%, the West Midlands at 34.2% and London at 21.9%.

But several of these regions seemed to be defying the trends when looking at failures for Quarter 1 2009 compared to Quarter 4 2008. In particular, London saw an 8.7% drop and the South East only saw a 6.5% increase in businesses failing.

Services sector starts to improve in Quarter 1

Not surprisingly, the Construction sector continued to report the greatest level of increase, year on year, in failures, with 65.2% more businesses folding in Quarter 1 2009 compared to the same period last year. But when compared to Quarter 4 2008 it appears that the downturn for the building industries may be reaching the bottom with just a 15.3% increase.

The Manufacturing and Retail sectors also saw quite significant year on year increases in failures at 44.4% and 44.8% respectively. But for both sectors the trend wasn't quite so severe when compared to Quarter 2008 with increases of just 13.7% and 13.6% respectively.

However, the Services sector seems to be performing the best, both in terms of year on year comparisons and compared to the last Quarter of 2008. Business failures year on year increased by 15.7% for Quarter 1 but there was a 9.4% drop in Service companies going under when compared to Quarter 4 last year.

"Whilst the comparison between Quarter 4 2008 and the first three months of this year show some slowing down of the very high levels of failures we were seeing last year, it is clear that more action continues to be needed from Government and the banks to inject funds into the economy as a whole, both to encourage consumer confidence and help businesses with important cash flow support" concluded Neil Munroe.

"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."

Equifax 2009 UK Business Failures Report

REGIONS

	Quarter 1 2009 compared to Quarter 1 2008	Quarter 1 2009 compared to Quarter 4 2008
East Midlands	+37.2%	+2.9%
East England	+40.7%	+14.1%
London	+21.9%	-8.7%
North East	+82.9%	+19.8%
North West	+41.1%	+18.1%
Scotland	+18.6%	-25.6%
South East	+47.5%	+6.5%
South West	+29.2%	-16.7%
Wales	+49.4%	+21.4%
West Midlands	+34.2%	+4.4%
Yorkshire & Humberside	+45.1%	+12.9%
TOTAL	+35%	+3.3%

SECTORS

	Quarter 1 2009 compared to Quarter 1 2008	Quarter 1 2009 compared to Quarter 4 2008
Construction	+65.2%	+15.3%
Manufacturing	+44.4%	+13.7%
Wholesale	+39.4%	+27.1%
Services	+15.7%	-9.4%
Retail	+44.8%	+13.6%
Transport & Communications	+38.1%	-1.5%

ENDS

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