Economy turns the corner as fewer businesses go bust
Published: 26 January, 2010
LONDON: The Business Failures Report, released by Equifax, shows that from the middle of 2009 onwards the rate of failures in businesses was slowing down, compared to the end of 2008 and the early part of 2009. The construction sector is starting to turn the corner, with failures down 6.9%.
"The figures for 2009 as a whole, compared to 2008, show an 18% increase in the number of businesses that went bust," said Neil Munroe, external affairs director, Equifax the quarter four figures indicate that the UK economy may be turning the corner," confirmed Neil Munroe, external affairs director of Equifax.
"The figures for the last quarter show a continuation of this trend with a 7.7% year-on-year decrease for the UK as a whole.
"The construction sector is definitely starting to turn the corner with a 6.9% decrease, although it was the retail sector that showed the strongest turn-around in the fourth quarter, with a 20.9% drop in failures year-on-year. This widespread decrease has to be good news for the economy as a whole."
Every business sector - apart from wholesale - saw a downturn in businesses going bust in quarter four 2009 compared to 2008.
There were also signs of promise across every region in the country apart from the West Midlands.
Failures there in quarter four 2009, compared to the same period in 2008, went up 3%. Meanwhile, businesses in the East Midlands and South West survived the best in quarter four 2009 with 20.2% and 21.3% year-on-year drops respectively. The London business sector also appeared to fare better in quarter four 2009 with a 13.4% drop year-on-year.
Mr Munroe pointed out that "the UK economy is not out of the woods. The businesses that have survived so far must continue to be very careful about how they manage their customer and supplier relationships to ensure they get paid on time and do not get caught out by bad debt or failure.
"They also need to make sure they are well prepared for external factors that they cannot change. It is unclear how the VAT change back to 17.5% is going to affect business," he stated.
"We think our latest figures should give encouragement to those organisations that have come through the last 12 months relatively unscathed," he said.