Insolvencies Falling as Economy Recovers

8 March 2011

The latest research by Experian shows the continued trend of fewer businesses becoming insolvent in January 2011 when compared to January 2010. 

The index reveals 1,266 businesses failed in January 2011 compared with 1,426 in January 2010.  In previous recessions the number of insolvencies has normally risen as the economy recovers but it would appear to be "different this time".  Some sectors have faired better than others with the construction industry only showing a modest 6% fall in insolvency figures, whereas the IT industry has seen a 30% fall. Scotland has shown a 16.9% fall in the number of insolvencies from January 2010 which was greater than a corresponding 11.2% drop for the UK as a whole.

These figures will give ammunition to those on the MPC who believe that the economy can absorb a small interest rate rise in order to tame inflation.  In addition, we shall have to wait and see what the budget holds for hard pressed businesses later this month.