Mixed messages abound about the state of the economy. But with insolvencies down, it certainly looks as though things are heading in the right direction...
Despite the confirmation of people’s fears of a double dip, there has been a lot to remain positive about these last few months. Recruitment figures are recovering and the ongoing funding logjam may ease now that the government’s Funding for Lending scheme has finally launched. Which is why the news from Experian, provider of financial analytics and marketing services, that business insolvencies were down last month, adds to an improving picture of the UK’s economy.
It’s hard to argue with the statistics: in July insolvencies dropped by nearly a tenth on the same month last year. Regionally there are some even more impressive improvements. Scotland’s insolvencies have dropped by 25% and, even more strikingly, as have those in the South East (which has the second largest number of insolvencies in the country after Greater London), where the number of businesses hitting the wall has dropped by almost a fifth. Hurrah!
A look at the detailed breakdown reveals further insights. Whilst neither the biggest or the smallest employers in the UK are immune from failure, the larger firms (with more than 500 employees) have seen a prodigious reduction in the total number of insolvencies, cutting the figure in half to just 7. By sector, both the extractive and oil industries saw their insolvencies plunge to zero in July; the insurance and postal and telecommunications industries saw reductions of 86% and 58% respectively.
As ever, the news cannot all be positive: the number of insolvencies in the automotive industry increased by two-fifths and the IT sector saw an jump of almost 25%. This also comes not long after The Insolvency Service’s quarterly report announced that Q2 saw a significant leap in the number of companies filing for insolvency. However statistical factors can discount some of these findings – for example the collapse of the Southern Cross Healthcare Group added an additional 104 insolvencies in Q2. So we’re not going to worry about it too much. There is so much good work being carried out by entrepreneurs and the SME community in this good country of ours, surely optimism is the order of the day?