The latest insolvency data from Experian reveals a massive increase in business failures across the UK. Insolvencies during November 2011 were up 25 per cent compared to the same period last year, and rose 41 per cent in Wales, 47 per cent in the Eastern region and a whopping 61.6 per cent in the North West.
London experienced a below average increase of 15 per cent. Only Yorkshire 7.2, the East Midlands 12.4, and Scotland, where insolvencies fell by 7 per cent, fared better than the capital.
Insolvencies in business services rose 40 per cent; IT by 54 per cent and motor traders by 56 per cent.
Experian also published its Financial Strength Score, based on the credit of businesses in each region of the UK. The score predicts the likelihood of a business failing in the next 12 months, with 100 being least likely to default and 1 being most likely. All eleven UK regions deteriorated, with Greater London falling fastest from 80.17 to 75.57.
All 36 UK industry sectors recorded deteriorating scores. Experian identifies food retailing as the most vulnerable to failures, and oil and agriculture as the two strongest sectors.
Max Firth, managing director for Experian’s Business Information Services division in the UK & Ireland, warned business needed to identify how they would cope if a counter-party went bust: “The latest insolvency index highlights that some businesses continue to need to assess the risk strategies they have in place very carefully.
“They need first to understand the risks they are exposed to and then protect themselves from debt that could be detrimental to their business on a regular ongoing basis.”