Ten Percent Increase In UK Business Failures In 2002
The number of UK businesses which failed in 2002 was 9.8% higher than in 2001, according to figures from global business solutions company Experian. Failures in the fourth quarter rose by 4.6%, indicating a slightly improving trend throughout the year.
The south east, including London and the City of London, recorded 8,191 failures in 2002 and 2,177 for the fourth quarter alone.
Phil Cotter, managing director of Experian’s Commercial Business, said: “Whilst the survey revealed a very small decline in the number of business failures between the third and fourth quarters of 2002, the sharp rise in compulsory liquidations is particularly worrying.
“Overall, there has been a steady increase in the number of business failures throughout the year, with particular areas of the country and industry sectors suffering significantly more than others.”
Media businesses Insolvencies in the media sector, still suffering from a lengthy decline in advertising revenues, rose by 8.9% to 598 in 2002.
However, the final quarter did show a 12.9% fall in the number of failures, suggesting a gradual pick-up in the sector’s fortunes towards the end of the year.
| UK Business Failures By Industry | |||||||
| Q4-01 | Q4-02 | %change on Q4-01 | YTD 2001 | YTD 2002 | Change YTD | % Change YTD | |
| Extractive Industries | 5 | 5 | 0.0 | 14 | 17 | 3 | 21.4 |
| Oil | 0 | 0 | 0.0 | 3 | 4 | 1 | 33.3 |
| Building & Construction | 377 | 345 | -8.5 | 1,465 | 1,445 | -20 | -1.4 |
| Building Materials | 1 | 3 | 200.0 | 4 | 12 | 8 | 200.0 |
| Chemicals Industry | 3 | 5 | 66.7 | 13 | 20 | 7 | 53.8 |
| Plastics & Rubber | 46 | 23 | -50.0 | 119 | 109 | -10 | -8.4 |
| Diversified Industrials | 120 | 120 | 0.0 | 456 | 435 | -21 | -4.6 |
| Electricals | 39 | 44 | 12.8 | 126 | 131 | 5 | 4.0 |
| Information Technology | 208 | 274 | 31.7 | 850 | 1,072 | 222 | 26.1 |
| Engineering | 190 | 199 | 4.7 | 727 | 809 | 82 | 11.3 |
| Printing, Paper & Packaging | 27 | 8 | -70.4 | 72 | 53 | -19 | -26.4 |
| Textiles & Clothing | 73 | 73 | 0.0 | 351 | 316 | -35 | -10.0 |
| Breweries | 0 | 1 | 0.0 | 2 | 8 | 6 | 300.0 |
| Spirits, Wine & Tobacco | 0 | 0 | 0.0 | 1 | 1 | 0 | 0.0 |
| Food Manufacturing | 26 | 20 | -23.1 | 105 | 89 | -16 | -15.2 |
| Pharmaceuticals | 0 | 1 | 0.0 | 2 | 8 | 6 | 300.0 |
| Wholesaling | 229 | 195 | -14.8 | 900 | 902 | 2 | 0.2 |
| Leisure and Hotels | 135 | 144 | 6.7 | 481 | 519 | 38 | 7.9 |
| Media | 155 | 135 | -12.9 | 549 | 598 | 49 | 8.9 |
| Food Retailing | 21 | 28 | 33.3 | 96 | 98 | 2 | 2.1 |
| Non-Food Retailing | 142 | 105 | -26.1 | 574 | 595 | 21 | 3.7 |
| Servicing/Repair | 4 | 6 | 50.0 | 24 | 37 | 13 | 54.2 |
| Transport | 144 | 131 | -9.0 | 536 | 581 | 45 | 8.4 |
| Utilities | 6 | 8 | 33.3 | 22 | 30 | 8 | 36.4 |
| Post & Telecommunications | 51 | 59 | 15.7 | 182 | 242 | 60 | 33.0 |
| Agriculture, Forestry & Fishing | 20 | 13 | -35.0 | 70 | 61 | -9 | -12.9 |
| Banking & Financial Services | 33 | 23 | -30.3 | 97 | 99 | 2 | 2.1 |
| Insurance | 16 | 15 | -6.3 | 60 | 54 | -6 | -10.0 |
| Health and Household | 4 | 3 | -25.0 | 16 | 17 | 1 | 6.3 |
| Business Services | 922 | 901 | -2.3 | 3,315 | 3,642 | 327 | 9.9 |
| Hiring and Leasing | 24 | 26 | 8.3 | 108 | 122 | 14 | 13.0 |
| Property | 77 | 84 | 9.1 | 318 | 312 | -6 | -1.9 |
| Motor Traders | 59 | 60 | 1.7 | 250 | 239 | -11 | -4.4 |
| Other Services | 55 | 69 | 25.5 | 214 | 254 | 40 | 18.7 |
| Dormant/Not Classified | 1,306 | 1,602 | 22.7 | 5,113 | 5,995 | 882 | 17.3 |
| TOTAL | 4,518 | 4,728 | 4.6 | 17,235 | 18,926 | 1,691 | 9.8 |
| Source: Experian, December 2002 | |||||||
“The current economic climate is certainly having an impact on business performance and confidence, so businesses need to be even more vigilant in looking out for the impending signs of insolvency and carry out regular checks on both new and existing customers to limit the risks of exposure to business failures and bad debt,” concludes Cotter.