Number of failing businesses on the rise in region

In contrast, the number of Yorkshire companies which failed dropped by 9.3 per cent last month compared to the previous May, making it the only region in the country to see a fall in the number of businesses becoming insolvent.

The figures, published by the Experian Business Insolvency Index this morning, show 58 North-East and 136 Yorkshire companies were declared insolvent last month.

The North-East also saw the highest increase in business insolvency rate of any region in the country, up from 0.09 per cent in May last year to 0.14 per cent last month.

Although it fell, Yorkshire’s rate, at 0.11 per cent, was also above the national average of 0.09 per cent.

Nationally, the UK saw 1,841 firms fail last month, the same rate as May 2011.

The figure was slightly up on April this year, which analysts believe was driven largely by smaller companies with fewer than 25 employees.

James Ramsbotham, the North East Chamber of Commerce’s chief executive, said: “It is worrying to see the North-East region experiencing the highest increase in the rate of business insolvencies.

“Our small firms have been through an incredibly challenging few years and it is imperative that these businesses are provided with the right support to enable them to make the correct judgements to stimulate the growth and sustainability of their businesses.”

Today’s figures also show firms with six to ten employees were particularly vulnerable, with the rate for this category becoming insolvent rising from 0.17 per cent in May last year to 0.20 per cent last month.

This is the first time that firms of this size category have experienced the highest rate of insolvency of all, compared with their larger and smaller counterparts.

Max Firth, UK managing director for Experian’s business information services division, said: “Our data has shown that, historically, the highest insolvencies have consistently been experienced by firms that have between ten and 100 employees.

“If a good credit management process is not implemented before reaching this size, then a firm may find it significantly harder to keep its head above water as it grows.”