Drop in business failures

Leading business information expert, Equifax, has reported a nearly 3% drop in the number of businesses going bust in April 2010 compared to March.

Neil Munroe, external affairs director at Equifax believes that while this drop in the number of businesses going under is still relatively small, continuing the downward trend in failures seen in Q1, it is an important indicator of a return to business confidence, despite a potentially unsettling period for commerce during the General Election campaign.

He said: “There is much speculation about the outcome of the General Election as voters go to the polls today. But it appears from our figures that uncertainty about the outcome hasn’t caused too much distraction for businesses – and they have concentrated on both generating sales and managing cash flow.

“In Quarter 1 2010 we saw a small – just half a percentage point – drop in failures compared to the end of 2009. We felt this could be an important indicator of how companies have been managing their operations, from cost cutting to improved collections, to survive in the current recession. And these new figures for April certainly seem to indicate a continuing positive trend.”

Overall there was a 2.8% drop in failures for April, compared to March according to the Equifax Business Failures Report. Regionally, the north east performed best, closely followed by London and the East Midlands. In the south west, the number of business failures fell 1.6%.

In terms of sector performance, the construction and retail sectors fared well in April with drops in failures of 12.3% and 9.1% respectively. The Wholesale sector performed least well with a 2.8% rise in failures in April compared to March.