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Product category: Building Industry Finance, Law and Insurance
News Release from: Equifax
Edited by the Buildingtalk Editorial Team on 17 May 2007

UK construction failures rise

Equifax Business Failures Report sees overall decline in businesses going bust though construction sector failures up nearly 12%.

Equifax, the business information specialist, has revealed its latest business failures results which show a small drop in businesses going bust in the first quarter of 2007 Recent business and industry reports have suggested that confidence in the UK economy is high - and the Equifax Business Failures Report supports this picture, with a 2.6% year on year decrease in business failures for Quarter 1

However some regions of the UK and some industry sectors have not fared as well, demonstrating that now is not the time for complacency.

"The 2.6% decrease in business failures shouldn't lull firms into a false sense of security" confirmed Neil Munroe, External Affairs Director, Equifax.

"Despite the overall drop, the market is still tough in many sectors".

"A number of regions of the country are also experiencing very high levels of insolvency year on year".

"Small businesses are the most vulnerable to issues such as bad debt, which is why it is essential that SMEs invest in tools that help them to reduce their financial risks".

The Construction sector saw the greatest increase in failures in Quarter 1 2007 compared to Quarter 1 2006, up nearly 12%.

The Manufacturing industry also suffered, with 10.7% more failures year on year, putting it well ahead of the Wholesale sector in third place with a 4.5% increase.

In contrast, despite steady increases in failures throughout 2006, the Retail sector saw a 5.9% decrease in businesses going under in Quarter 1.

The Transport and Communications sector, which also experienced rising failures throughout 2006, had the greatest drop - with 19% less businesses going bust compared to Quarter 1 2006.

From a regional perspective, Northern Ireland and Scotland saw extremely high levels of failures year on year - both at 47% - putting them way out in front of other regions and painting a gloomy picture for businesses in these areas.

Worryingly, the North East also continued to see a rise in failures in Quarter 1 2007, with 11.3% more businesses failing compared to Quarter 1 2006.

And the Yorkshire and Humberside region saw failures increase year on year by 4.1%.

However a number of regions achieved reductions in failures year on year.

These included the East Midlands at 0.3%, the South East at 3.2%, the East of England at 4.1%, the North West at 4.7% and the South West at 4.9% - providing a good foundation for business growth in 2007.

Businesses in London, with a 10.1% drop and the West Midlands with a 9.7% drop, performed even better year on year.

And Wales saw a significant reduction in failures, of 14% year on year, compared to the region's position at the top of the table in 2006 for the greatest percentage increase in failures".

"It is crucial to recognise the catastrophic effect the failure of customers or suppliers can have on an organisation", concluded Neil Munroe".

"That's why it's crucial to not only do the initial checks, but maintain ongoing monitoring which will highlight changes in a customer's financial status and ensuring businesses always know who they're doing business with and understand the risks".

"They will then be able to avoid the threat of fraud and bad debt, which can all too easily lead to their own failure.".

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