Business failure rates fall to one year low

There has been a marked decrease in the numbers of firms going out of business in the UK, according to data from Experian’s Insolvency and Distress Index which estimates 1,796 companies went into administration in August 2009.

This is 23% lower than the figures for July 2009 and the smallest increase since September 2008, almost a year ago.

But just as entering a recession was unclear for some time, so exiting a recession is certainly not black and white.

The overall stock of new businesses has continued to rise and Experian believes this may mask the real impact on business closures of the greatest global downturn since the end of WWII.

The number of firms on the brink has also decreased slightly with Experian reporting that its ‘distress’ score (the number likely to close soon) has also improved to be at its most robust since August last year.

The jury’s still out on how devastating this recession is likely to be in terms of jobs and business closures. Both tend to be known, notoriously, as ‘lagging indicators’.

Just in raw numbers alone, the number of business closures is already on a par with the total for the last major recession in the early nineties.

[Picture credit: mycuteladybug licenced from Flickr]