Insolvency rate stays very low at 0.08%

2 June 2013

The latest research from Experian shows continued low levels of insolvency, with Scotland particularly seeing an improving picture.  Insolvency rates are at more than half the levels seen in 2012.  Only 43 businesses became insolvent in April compared to 103.  This represents a level of just 0.03%

The UK average level is 0.08%.  Key points in the statistics are as follows;

Companies with 500+ employees saw the insolvency rate fall from 0.12% to 0.06% in the month of April when compared to March.  However it fell from 0.08% when compared to April last year.  This still represents a substantial fall.  

Smaller businesses with 1-2 employees remained at the continued low rate of 0.06%

Slight falls were evident in medium sized businesses with a rate of 0.14% down from 0.16%

Regionally the North West has shown the most improvement with the levels of insolvency down from 0.12% to 0.09%

This is all good news for the economy and jobs.  So what is behind the improvement?  Most analysts agree that much of it is due to the banks being reluctant to call in debts, and HMRC not adopting a tough stance against businesses that are not paying VAT and PAYE.  There has been much change at HMRC with the introduction of RTI so time will tell if they have improved on collecting money in.

The economy does appear to be improving with increased optimism and a rise in house prices.  It will be interesting to see what the retail sales statistics show this time round.