Business failures rise by one third in a year

MORE than 30,000 UK businesses collapsed in the first six months of the year, a third more than in the same period in 1991, according to figures from the business information company Dun & Bradstreet.

The number of business failures recorded for the second quarter of the year was 15,841, an overall increase of 6.5 per cent on the 14,881 reported in the first quarter. The rate of collapse also rose, from 1,240 a week in the first quarter to 1,320 in the second.

However, the company's latest quarterly survey shows that the increase is mainly among small businesses. This is indicated by a 51.4 per cent increase in bankruptcies over the same period last year, compared with a rise of less than 10 per cent in company liquidations.

There are wide regional variations, with the South-east, South- west and the West Midlands all suffering increases of 40 per cent or more and London showing the smallest rise, 12.8 per cent.

Philip Mellor, Dun & Bradstreet's marketing manager, said: 'The rate of business failure is still continuing to increase and we see no signs of a let-up in the collapse of small businesses. This pattern is following previous recessionary cycles where the pace of failure continues at a high level for between one and two years after a recession has ended.'

But there is a contrasting picture from the Institute of Directors, which reports that business confidence is showing tentative signs of recovery.

Half of the directors questioned in June were more optimistic about the UK economy, compared with 48 per cent in April. This is the highest level of sustained optimism since August 1988, the IoD says in its latest bi- monthly business opinion survey.

'With the volume of business and profits at their highest level for two years and the level of orders rising, the conditions are now in place in the private sector for gradual, sustained recovery,' Janice Buck, economic research executive at the IoD, said.

There is also some optimism from the West Midlands regional group of Chambers of Commerce. A steady but extremely slow economic recovery is under way in the area, bringing a strengthening of confidence among manufacturing and service companies, it says.

Businesses in both sectors said they were looking forward with expectation although trading conditions were far from easy, the organisation's latest quarterly economic survey says. Nearly 700 companies from a cross-section of industry responded to the survey covering the period from March to the end of last month.

'Recovery is coming step by step. It is not as fast or strong as companies would like, but the economy is moving in the right direction,' said Andrew Millward, chairman of the regional group of chambers, which represents about 13,000 companies.

However, there are further pessimistic signals from the credit information organisation Infolink. Demand for consumer credit in all four sectors of home loans, retail, finance houses and new car loans fell in May compared with last year. 'This disappointing slide . . . can only encourage speculation that a sustained recovery from the recession is still a long way off,' its latest consumer credit survey says.

In addition, the export indicator for the second quarter carried out by Gallup for the international courier DHL says only a third of UK manufacturing exporters believe the UK is ahead of its competitors in coming out of recession.