Business failures highest for five years

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The Independent Online

Business failures soared 12 per cent in 1999 and are now running at about 830 a week, their highest for five years.

Business failures soared 12 per cent in 1999 and are now running at about 830 a week, their highest for five years.

A survey released today by researchers Dun & Bradstreet shows that an upturn in the economy is yet to feed through to business in most areas of the country.

In total, 43,365 firms collapsed last year, up from 38,634 in 1998. But there was some improvement in the final quarter of the year, suggesting that the outlook for 2000 may be brighter.

Many firms cited late payment of bills as a major factor, and D&B warn that, consequently, the millennium bug could yet bring a number of firms to their knees. Philip Mellor, senior analyst at D&B, said that people could be tempted to pretend their cheques have been mislaid by confused computers.

"Because late payment is a frequent cause of business collapse, we would expect a rise in the number of business bankruptcies in the first part of this year. Then we would expect the number of business failures to drop as a result of the improvement in the economy."

There is a time lag of around a year between improvements in the economy and falls in the rate of business failures. Last year saw one of the biggest annual increases in the number of business collapses, while growth levelled out. The UK economy is estimated to have grown at 2 percent in 1999, not far off the 2.2 percent achieved the year before.

The numbers of business going to the wall remain well below the decade's peak, when 62,767 firms failed at the close of the recession in 1992.

The D&B survey shows considerable regional variation, with the number of business collapses well below average in the south-east of England and actually falling in London. Only 6,006 businesses failed in the capital last year, down 3.4 percent on 1998.

The worst hit area last year was Wales, where failures were up more than 26 per cent, while the east of England and East Midlands also saw increases well above the national average.

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