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Economy

Business failures up 10%

Written by Gary Howes

Friday, 18 July 2008

Latest figures show North East early victim of economic slowdown.

The Equifax Business Failures Report for Quarter 2 2008 reveals that total failures rose by 10% when compared to the same period last year.

Businesses in Scotland appear to be managing business and cashflows adequately to keep failures under control experiencing a drop in failures by 3%.

The North East has seen failures soar in Quarter 2 with an increase of 30.8% compared to the same period last year.

The North West continues to suffer with a 23% increase and the East Midlands close behind on 22.6%. Other regions that saw increases were Wales with a year on year rise of 12.3% and the West Midlands at 11.4%.

London and the South East

Businesses in London fared well in Quarter 2 with failures only rising by 1.8% year on year, which was markedly better than Quarter 1 when the Capital saw a 13.9% increase in failures year on year.

However, the South East saw quite a significant rise in year on year failures in Quarter 2 by 16.5%.

“We have just seen the British Chamber of Commerce (BCC) warn of a “serious risk” of recession, following its business confidence survey,” explains Neil Munroe, External Affairs Director of Equifax. “This is, therefore, no time for complacency in any region and UK businesses must not lose sight of taking the right steps to manage risk.

Sectors

The Construction sector was the hardest hit in Quarter 2, with failures up 20.3%, compared to same period last year. This reflects the downturn in the sector already widely reported.

The Retail sector followed close behind with a year on year increase in businesses going bust of 15.7%. These figures reflect the impact of difficult conditions over a number of months for those retailers unable to manage cashflow against declining sales.

Looking at the wider picture, other sectors haven’t been as badly hit. The Wholesale sector saw a rise of 7.6% in businesses going bust, whilst the Manufacturing and Services sectors saw increases of 4.8% and 3.1% respectively.

In contrast to the overall gloomy figures, the Transport & Communications sector actually saw a drop in failures year on year, of 9.3%.