Business failures in the UK fell by 4.1% to 4,611 in the third quarter of 2006, compared to the same period in 2005, bringing the total for the year so far to 14,216. But figures for the year as a whole are still down.

Richard Lloyd, Managing Director of Experian’s Business Information division, commented, “The improvement in failure rates is well and truly welcomed and it provides an indication that things are picking up. However, when you look at the bigger picture, it is not as clear-cut. During the year to date, there has actually been an overall increase in business failure of 4.4% during the first nine months of the year compared to the same period in 2005.

“This illustrates that a very mixed picture is emerging and until the end of the year, we won’t know for certain which way the business failure pendulum will swing.

“The UK suffered its biggest increase in business failures since 1999 during the first quarter of 2006. The slowdown in the rate of business failure began during the second quarter and has continued with the latest quarter showing an overall fall of 4.1%. At the same time, we are also seeing an improvement in the time it takes businesses, especially large businesses, to pay their bills.

“Whilst the message about the importance of businesses checking the creditworthiness of their customers and potential prospects is getting through, you can’t disguise the fact that looking at 2006 so far, business failures are still on the increase. As a result, businesses cannot afford to be complacent and must ensure that they protect their business and their employees from the threat of insolvency.”