More UK firms declared insolvent in 2011

25 January 2012

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25 January 2012 | Adam Leach

The number of businesses declared insolvent in 2011 increased from the year before, latest figures show.

According to data released by business services firm Experian yesterday, 1,252 more insolvencies happened in 2011 than in 2010. The Insolvency Index revealed in total 21,070 businesses failed (1.1 per cent of the UK business population) last year compared with 19,818 in 2010 (1.03 per cent).

However, Experian suggested despite the rise in insolvencies, the UK business sector actually held up against the stress quite well. “Given the challenging economic climate in 2011, businesses in the UK were pretty resilient and this was reflected by the stable insolvency rate during the year,” said Max Firth, UK managing director for business information services at the firm.

But he warned businesses will need to stay resilient with more economic difficulty predicted for 2012. It was announced today that UK GDP declined by 0.2 per cent in the final quarter, and yesterday the IMF revised down it’s growth estimate for the UK for the year to 0.6 per cent from 1.6 per cent.

“For businesses to improve their financial health and avoid insolvency, it is vital that they understand the risks they are exposed to and have strategies in place to protect themselves,” said Firth. “By monitoring the performance of all current and potential clients, they can fully understand and prepare for the impact they could have on them if they failed.”

During the year there were a number of high-profile insolvencies, as household names fell under the stress of the recession and declining market conditions. In April, off-licence chain Oddbins went into administration, followed by Focus DIY a month later. In November, the British arm of car manufacturer Saab, Saab GB, also succumbed as it too entered administration after a prolonged period of uncertainty.

 

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