The number of businesses going bust in the West Midlands continued to increase during the spring months of this year at a faster rate than across Britain as a whole.
Regional numbers from the credit information company Equifax showed 940 West Midlands business failures in the second quarter of this year, up from 859 in the first three months.
This 9.4 per cent increase compared with one of only 2.2 per cent across Great Britain and was matched only in London. Some regions that had been hard hit early in the recession showed material improvements.
This trend appears not to have been driven by failures in the West Midlands manufacturing base. Nationally, the number of manufacturing companies going to the wall rose by only 2.9 per cent between the first two quarters of the year.
Neil Munroe, external affairs director at Equifax, noted a fast-increasing number of consumer-facing service businesses – including pubs, restaurants and hotels – failing across the country. He suggested that these, rather than manufacturing industry, could have accounted for the poor showing of the West Midlands.
Retailing, construction, transport and communications all showed improvements.
Mr Munroe saw the national numbers as an indication that UK businesses may be starting to recover from the sharp downturn that kicked in from the middle of last year.
“The recession is still having an enormous impact on business fortunes, with many organisations simply unable to survive against the onslaught of falling sales and restricted access to funding to cover the cashflow gaps,” he said.
“But our figures seem to suggest that we could have hit the bottom of the recession by the time we reached the end of the second quarter and in some areas there has been an improvement, albeit small.”
He stressed that it was crucial for business that are holding their own to take precautions to protect themselves from the risks of the present extremely tough trading conditions.
“They need to continue to use rigorous credit checks, alongside ongoing monitoring of the financial status of their customers and suppliers,” he said.