Big decline in UK business failures in Q3 2009

Although businesses big and small continue to go into insolvency and the situation is worse than a year ago, the rate of firms going bust in Q3 has fallen by 13.5% compared to Q2 according to the latest figures from Equifax’s 2009 Business Failure Report.

All business sectors and all regions of the UK have seen a slowing in the number of businesses closing their doors during June-September of this year.

Wales and the North East have seen the failure rate fall by 25% quarter-on-quarter, while the wholesale sector has performed the best with closures falling by 19.4%.

All of this, of course, doesn’t hide the fact that thousands of SMEs are going bust every month. Nevertheless, Neil Munroe of Equifax believes its latest data do offer some cause for cautious optimism:

… this must give businesses in general and the UK economy as a whole some confidence that the extreme difficulties we have been experiencing may be lessening … [but] it is crucial that these early signs of recovery are not over-stated.

A realistic approach continues to be paramount. Many businesses will have cut to survive.

Over the next six months, the real test of whether the worst of business closures is over, will be signs of a recovery in demand, sales and profitability.