High Street Suffers Biggest Rise in Business Failures in 2006 According to the Equifax Business Failures Report for 2006
Plus tough Trading Conditions for North East and Scotland in Q4 2006
London, 8th January 2007 – With a ‘mixed’ Christmas predicted for high street retailers, Equifax, the business information specialist, has revealed that the retail sector suffered the biggest year on year increase in business failures in 2006 with an increase of 17.2% in failures versus 2005.
Whilst there was a seasonal rush of interest in December with Christmas shopping and sales, the underlying picture suggests that shoppers were more selective about where to spend their money in 2006, demonstrated by the rise in online spending and the performance of the large supermarkets.
In contrast, the service sector proved to be in good shape in 2006 with a drop in business failures of 7.7% against the previous year. Manufacturers also performed well with a drop in failures of just over 2% year on year. However, Quarter 4 saw a sharp jump in business failures in the Manufacturing sector of 11.3% against the same Quarter in 2005. This backs up recent industry reports that the Manufacturing sector’s expansion decelerated in the last months of 2006.
Regionally, Welsh businesses suffered the biggest increase in business failures year on year with a 13.4% rise. The South East also saw a significant increase, with failures jumping 9.3% on the previous year.
Although business failures in the North West fell by 2.3% overall in 2006, the region saw a dramatic 21% rise in firms going bust in the final quarter of 2006, suggesting tough trading conditions at the end of the year for this area of the country. Scottish businesses also experienced a significant rise in failures at the end of the year, with 24.2% increase against the same quarter in 2005.
Neil Munroe, External Affairs Director, Equifax says: “We know that a good proportion of these business failures would have been small businesses. It is therefore vital that SMEs take advantage of the tools available to them to reduce the financial risks to their businesses. Carrying-out initial credit checks on customers and suppliers, supported by ongoing monitoring of any changes to their financial status is essential to protecting SMEs from the risk of bad debt and their business failing.”
January – December 2006 UK Business Failures
Regions
Increase or decrease in failures October - December 2006 vs 2005 and January - December 2006 vs January - December 2005
Q4 2005 vs 2006 |
Jan - Dec 2005 vs 2006 |
|
Wales |
+4.3% |
+13.4% |
West Midlands |
+1.1% |
+7.4% |
North East |
+21.1% |
-2.3% |
Yorkshire & Humberside |
-9.6% |
+5.2% |
East of England |
+9.7% |
+7.5% |
South West |
+5.9% |
+5.4% |
South East |
+19% |
+9.3% |
London |
+2.1% |
+1% |
East Midlands |
+4.3% |
-6.6% |
Scotland |
+24.2% |
+7% |
Northern Ireland |
-3.1% |
-6.2% |
North West |
+1.7% |
+1.2% |
TOTAL INCREASES YEAR ON YEAR |
+6.4% |
+4.1% |
Sectors
Increase or decrease in failures October - December 2006 vs 2005 and January - December 2006 vs January - December 2005
Q4 2005 vs 2006 |
Jan - Dec 2005 vs 2006 |
|
Retail |
+11.6% |
+17.2% |
Other |
+10.7% |
+9.9% |
Transport & Communications |
+0.4% |
+4% |
Wholesale |
+6.6% |
+4.9% |
Construction |
+2% |
+1.1% |
Manufacturing |
+11.3% |
-2.2% |
Services |
-3.9% |
-7.7% |
END
