Sharp increase in company failures

Business services firms have been worst hit

There has been a sharp increase in the number of businesses going under in the last three months, according to credit specialist Experian.

Corporate failures have been running at the rate of 355 a week

Phil Cotter
Experian

It said 4,754 companies failed in July, August and September, a rise of 16% compared with the same period last year.

And so far this year 14,198 businesses have collapsed, 11.6% more than in the first nine months of 2001.

The research also found that compulsory liquidations had jumped 30% in the first nine months of 2002.

Worsening trend

"Although there was a decline in company failures in September, this is largely due to seasonal effects and the long-term trend is definitely still upwards," said Phil Cotter, director of Experian's business information division.

"Every one of the 34 industry sectors covered by this report is showing an increase over the previous year in the first nine months of the year."

The highest number of failures during the three months to the end of September was in business services with a 13.8% increase to 910.

Building and construction, information technology, wholesaling and engineering also experienced high failure rates.

Whole economy suffers

More than 42% of the failures during the third quarter of the year were in London and the South East.

The North West accounted for 34% of the firms going out of business during the same period.

"Corporate failures have been running at the rate of 355 a week throughout the year and continue to affect every part of the economy," said Mr Cotter.

Experian's research is based on an analysis of adverse notices received from Companies House that indicate businesses have little or no chance of recovering to normal status in the future.

These include voluntary liquidations, compulsory liquidations, administration orders and receiverships.