Failure Rate Soars
Published:
17/11/06
First the good news. The growth in failures amongst UK companies slowed to 19.2 per cent in the third quarter of 2006 compared to the same period last year. That represented nearly 19,700 companies going bust or ceasing trading between July and September.
And that’s as good as it gets. For the year to date, the latest D&B figures show that the rate of increase in corporate collapse is no less than 27.5 per cent, with a total of 59,315 companies going under in 2006 so far.
D&B’s statistics show a bleak picture across the country: failures in the traditionally prosperous South East jumped by 26.3 per cent, while the comparable figure for the hitherto healthy South West was 25.3 per cent.
It’s more pointed still in the West Midlands, long considered a powerhouse for the British economy. The cascade effect of high profile industrial majors ceasing production has contributed to a 34.5 per cent hike in the failure rate, while the North West – 38.3 per cent higher – is even worse.
Wales, where Cardiff and Swansea are frequently cited as models of regeneration, nonetheless has a failure record 44.6 per cent up on last year.
Commenting on the D&B figures Bob Lilley, managing director of CIFS said: “These bald figures mask a lot of pain for the principals, employees and, yes, the suppliers of the companies that have folded this year. And yet, a recent research report tells us that 60 per cent of companies transact business without conducting any credit checks at all.
“If ever there was a wake-up call for them, this is it.”
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