Leading business information provider, Equifax, has released its Business Failures Report for the first quarter of 2010, revealing an apparent steely determination by UK businesses to survive – despite the recession.
As Nic Beishon, Head of Equifax Commercial Information Solutions explained, whilst the drop in businesses going bust since the end of last year is very small – just half a percentage point – it could be an important indicator of how companies have been managing their operations, from cost cutting to improved collections, to survive in the current recession.
“Our new analysis appears to suggest that UK businesses have been working hard to recover from the challenges of the last 18 months or so – or at the very least simply survive!” said Nic Beishon. “When compared to the last quarter of 2009, overall there was a very small drop of just 0.5% in businesses going under in Quarter 1 2010. And whilst this number is small in itself I believe it is an encouraging sign of a turn-around in fortunes for the UK economy as a whole although, clearly there is still much to do to put real confidence back into commerce.”
The Transport & Communications, Services and Wholesale sectors each saw drops in failures in Quarter 1 2010 compared to the last quarter of 2009. However, in quite marked contrast, the Retail sector experienced an 11.2% increase in businesses going under – perhaps reflecting those businesses that simply couldn’t survive after difficult Christmas trading or that were impacted by the bad weather that seemed to persist for much of Quarter One. The Construction and Manufacturing sectors also saw increases in failures in Quarter One compared to the end of last year.
Regionally, the North East, South East, West Midlands and Scotland saw declines in the number of businesses going bust at the start of the new decade compared to the end of the Noughties. However, for some regions the picture was less positive in the first few months of 2010. The South West saw a 14.8% increase in failures quarter on quarter and there was a 10.9% rise in businesses going under in the East Midlands.
But when comparing the number of Business Failures in Quarter One 2010 with the same quarter in 2009 there was, perhaps not surprisingly, quite a significant drop across most sectors and regions, which Nic Beishon believes reflects a slowing of the downturn.
Overall there was a 11.1% drop in businesses going bust and the Wholesale, Retail and Transport & Communications sectors all recorded decreases in excess of 20% year on year.
“There is no getting away from the fact that the economy is still incredibly fragile” concluded Nic Beishon. “But these latest figures do seem to give some hope that UK businesses are fighting hard to come out of the recession, alive and kicking!
“Businesses and trade bodies all across the UK should take heart from these latest figures but obviously need to be mindful that it’s still early days to be believing this is a clear trend, especially whilst the economy remains fragile as we await the outcome of the General Election”, concluded Nic Beishon.
“UK businesses must, therefore, continue to take the right precautions to protect themselves from some of the risks of the continuing difficult 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.”
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