NEW BUSINESS DATA REVEALS SUSTAINED INCREASE IN BUSINESS FAILURES
Equifax research indicates that consumer confidence could be impacting UK economy
London 14th July 2005 – Equifax Ltd, one of the leading providers of business information, has released new data on business failures that brings into question other market indicators on the UK economy. The latest Equifax Business Failures Report, which looks at reported Liquidations and Petitions for Liquidation shows that in several key sectors, business failures have increased year on year. And significantly, the level of business failures has increased in the first half of 2005, compared to the latter part of 2004.
“There has been much debate recently about whether the UK economy is steady or, in fact, is in a slow decline”, reported Nick Frazer, Head of Business Information Services of Equifax. “But the Equifax Business Failures Report indicates that there has, indeed, been a steady increase in the level of business failures in a number of key sectors. These include the general retail sector, the transport & communications industry and the construction industry.
“Interestingly, however, the motor retail sector – which has seen a general decline in new car sales over the last few months has actually seen a very small reduction in the number of business failures for the first half of this year, compared to the last half of last year. This must be, albeit in a small way, encouraging for this sector.
“Although the motor retail figures are more positive, what our data appears to suggest is that consumer confidence has been in a lull through 2004 and into 2005 and, in fact, the General Election in May did nothing to boost economic confidence generally” concluded Nick Frazer. “It will be interesting to see what the June Business Failure Report looks like (released later this month) and whether, post the General Election, there are any early signs of renewed confidence.”
The Equifax findings also highlight the importance of credit checking organisations before embarking on new contracts or relationships. Over 80% of the businesses that went into liquidation or were petitioned for liquidation in the first half of 2005, were given a zero credit rating by Equifax three months prior to failure. Equifax Business Credit Ratings are calculated using a comprehensive range of information, including fraud data and blend of commercial and consumer information unique to Equifax, which, in combination is highly predictive of business failure.
EQUIFAX BUSINESS FAILURES REPORT
The following data shows business failures logged by Equifax including Liquidations, Petitions for Liquidation and Business Rescues
| Sector | Business Failures 2003 | Business Failures 2004 | Aug-Dec 2004 | Jan-May 2005 |
| Retail Sector | 955 | 1209 | 409 | 664 |
| Motor Retail Sector | 430 | 559 | 245 | 241 |
| Construction Industry | 2644 | 3018 | 1330 | 1587 |
| Transport & Communication Industry | 1019 | 1248 | 512 | 600 |
