BUSINESS FAILURES INCREASE 3.5% YEAR ON YEAR UP TO JULY 2006
And many UK businesses struggle to obtain new finance with nearly 3% rise in zero credit limits
London, 18th August 2006 – In the most up to date analysis of UK business failures, leading business information expert, Equifax, is reporting that the trend of failures increasing year on year has continued. However the pace of failures appears to have slowed down compared to earlier in the year. But what is more worrying, particularly in light of the recent interest rate increase, is the rise in the number of businesses with a zero credit limit and therefore unable to obtain new finance to support their business. This has gone up by nearly 3% compared to the same period in 2005.
Figures up to July 2006 show that overall 3.5% more businesses failed from January to July 2006, than in January to July 2005. But when looking at performance in the individual market sectors, there is an interesting picture of business confidence – and lack of it through the UK economy.
The Retail sector appears to be faring worst at 14%, with Transport & Communications showing a 6% increase in failures and Construction 4%. However, the Manufacturing and Services sectors both appear to be performing better in 2006, each showing a 7% decline in business failures year on year.
“The sectors that have fared particularly well in the Spring and early Summer are those that have probably benefited the greatest from a general upturn in consumer confidence”, confirmed Neil Munroe, External Affairs Director, Equifax. “However, the interest rate rise could put paid to that confidence in the second half of the year, which could have a serious impact on these sectors.”
The regional picture of business failures is also quite interesting. There doesn’t appear to be any obvious North-South divide with the East Midlands, North West, Scotland and Northern Ireland all showing drops in business failures, whilst Wales, the West Midlands, Yorkshire & Humber show the highest increases year on year.
“What our figures seems to suggest is that business prosperity is still quite fragile across the UK”, confirmed Neil Munroe. “And when you see that the number of businesses with a zero credit limit has also increased there should be a concern that business growth is going to be difficult to achieve in the second half of the year.”
With the prospect of a further interest rate increase later this year, Equifax is urging companies to protect themselves by implementing risk management procedures, including basic credit checks. In particular, Equifax believes smaller businesses are most at risk in a tough market.
January – July 2006 UK Business Failures
Regions
Increase or decrease in failures January – July 2006 vs January – July 2005
Increases |
|
Wales |
+21.5% |
West Midlands |
+14.9% |
North East |
+13% |
Yorkshire & Humberside |
+11.7% |
East of England |
+6.7% |
South West |
+5.1% |
South East |
+3.7% |
London |
+2.2% |
Decreases |
|
East Midlands |
-11.9% |
Scotland |
-7.3% |
Northern Ireland |
- 4.1% |
North West |
- 2.8% |
TOTAL INCREASES YEAR ON YEAR |
+3.5% |
Sectors
Increase or decrease in failures January – July 2006 vs January – July 2005
Retail |
+14.1% |
Other |
+7.73% |
Transport & Communications |
+6.3% |
Wholesale |
+5.3% |
Construction |
+4.4% |
Manufacturing |
-7.4% |
Services |
-7.3% |
TOTAL INCREASES YEAR ON YEAR |
+3.5% |
END
