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Insolvencies ease up but construction still comes out worst

20 Aug 12 Construction companies are continuing to fail at almost twice the rate of other industries, though the insolvency percentage has improved since last year.

In July, 0.17% of the construction business population failed, compared with 0.09% of across all industries. Construction’s percentage is effectively the worst of all sectors, as the 0.2% for breweries represented only one insolvency.

The latest insolvency index from Experian reveals a fall in the rate of insolvencies among UK business. In building and construction, there were 289 insolvencies in July, a 5.2% fall from July 2011. This meant that 0.17% of the business population failed in July this year, from 0.19% last July. Five building materials companies failed in July, showing no change from last year.

During July, 1,776 companies across all industries (0.09% of the business population) failed, compared to 1,962 companies (0.10%) in July 2011.

Improvements were across the board, but the biggest improvements across all sectors came from the UK’s largest firms of over 501 employees. The figure fell from 0.15% last July to 0.08% this year. There was also a marked improvement among smaller firms with 11 to 25 employees, where the rate improved from 0.26% last July to 0.19% this year.

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Experian business information services UK&I managing director Max Firthsaid:“Since March this year, when the insolvency rate peaked at 0.11%, it has remained fairly stable – between 0.08% and 0.09%. The lack of any real increase is clearly welcome and this picture is unlikely to change in the near future.

“The figures continue to underline the importance of good insight into the financial risks associated with insolvencies among both clients and suppliers and how these issues can affect their business.”

Scotland has historically held some of the lowest insolvency rates, but after January 2012, Scotland’s insolvency rates were higher and more in line with the rest of the UK. During July 2012, however, Scotland saw the biggest month-on-month fall in its insolvency rate – from 0.09% in June to 0.05% in July – and is now at its lowest point since July 2010.

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