The latest Insolvency Index from Experian ® has revealed a significant year-on-year drop in business insolvencies during October.

1,635 UK businesses failed last month, 17% fewer than the 1,976 insolvencies recorded in October 2009. This equates to an insolvency rate of 0.08% of the business population in October 2010, compared to 0.10% the year before, and generally reflects the long term improvement in insolvencies.

Although at 81.00, the financial strength score of UK businesses in October was marginally lower than the 81.14 recorded in October 2009 and also when compared to last month (81.05), the overall trend shows a general upward trajectory since May this year.

Max Firth, managing principal of pH, an Experian company, said: “It is encouraging that the business population in general is faring better in terms of insolvencies than this time last year, despite mid-market failures increasing in October. It remains crucial for organisations to ensure that they use data insight to help them understand and manage the risks in today’s marketplace.”

Some other key findings were:

All UK regions saw year-on-year falls in insolvency rates, with Scotland again regaining its position as the region with the lowest rate of insolvencies (0.05%).
Yorkshire and the North East (the regions with the highest insolvency rate in Oct 2009) saw the biggest improvements with insolvency rates dropping over the last year. 0.11% of businesses in the North East failed in October 2010, compared to 0.14% in October 2009, while Yorkshire saw rates decline from 0.15% to 0.07%.
Greater London continues to be the region where businesses had the lowest financial strength score at 79.83.
The largest companies saw the biggest improvement to the insolvency rate with it dropping to 0.10% from 0.16% last October.
The mid-sized companies, those with 51-100 or more employees, were the only businesses to see an annual increase, with the insolvency rate leaping to 0.24% from 0.19% in 2009.
Only 10 out of the 35 industries saw an improvement in their financial strength with the leisure and hotel industry leading the rise from 78.76 in October 2009 to 79.29 – the biggest improvement of any sector.
Businesses in the oil industry held the highest financial strength score during October – 85.86, with Food retailers at the opposite end of the spectrum with lowest score of 75.49.