The latest insolvency figures to be released paint a gloomy picture for the West Midlands economy as the credit crunch continues to bite.
More than 500 businesses became insolvent in the region in just three months, an increase of nearly a third on the year before.
So far this year a total of 1,494 businesses have failed in the West Midlands – more than five a day, according to the figures published by global information services company Experian.
Nationally, the latest insolvency analysis showed that there were 16,591 UK business failures in the first nine months of 2008, representing a 22 per cent increase on to the same period in 2007.
In the last two months alone 5,957 businesses in the UK failed. Key sectors affected included Business Services with 1,284 insolvencies in the third quarter, taking the annual total for the sector to more than 3,550 failures.
Building and Construction saw 537 failures in the same time, while the Property sector, with 434 failures during the quarter saw its annual figure reach 891 failures, far more than double the figure in 2007.
Tony Pullen, managing director of Experian’s business information division, said businesses were going to have to be very careful about their margins if they were going to survive.
“Businesses, now more than ever, need to know who they are dealing with and that their customers and suppliers have the means to pay.
“Given the difficult trading conditions and rise in insolvencies, it is important that businesses take the right steps to safeguard the supply of their goods and services. The best approach is to continually monitor customers’ and suppliers’ commercial integrity against financial performance, credit risk information and payment behaviours. Access to this level of insight provides the intelligence to help businesses manage their exposure to risk.”
Research by information group Equifax claimed the West Midlands had so far avoided a major downturn, despite tough conditions.
But it said companies in the East Midlands were weathering the storm far better than those in the west of the region.
Business failures in the East Midlands fell by 1.3 per cent in the third quarter of the year compared with the first three months, Equifax said.
In the West Midlands the number of companies going bust rose by 10 per cent over the same period. But despite that Equifax said the region is still faring better than some.
Failures in the North East, the worst hit area, rose by nearly a quarter (23.4 per cent).
Both the Experian and the Equifax figures showed the worst-hit industries had been those involved in manufacturing and construction.