Dramatic fall in failures brings hope that worst of the recession is over

According to figures provided by the business information firm Equifax, Yorkshire and North Lincolnshire recorded a 22.8 per cent drop in business failures in January and February, when compared to the same period in 2010.

It was the biggest regional drop in the UK.

There were 406 business failures in Yorkshire and North Lincolnshire in January and February, compared with 526 in January and February 2010.

The figures from Equifax follow the latest data released by the Office for National Statistics (ONS) which showed total industrial production rose by 4.4 per cent in January year-on-year, while manufacturing output rose by 6.8 per cent over the same period.

“We saw a steady drop in the number of organisations failing throughout 2010 – and these latest figures are continuing that trend,” said Neil Munroe, external affairs director, Equifax.

“While there is no question that conditions remain difficult – and certainly at the end of last year and the first two months of 2011, the bad weather played its part in hitting sales – we believe that good business management has paid off for many organisations.

“In particular, pay freezes and tight control on invoice payments provided the essential focus on cost control and cash flow management to aid survival.

“But, of course, it is still early days for 2011 – and there will be much expectation on next week’s Budget to help stimulate further growth.”

Only the hotel and catering sector saw an increase in failures year-on-year – at 14.6 per cent, but all other business areas reported decreases, with the construction industry showing the best performance at a 20.3 per cent drop year-on-year.

Mr Munroe said: “These figures should give lenders confidence that businesses are taking all the right measures to protect their financial stability and, therefore, encourage new lending to support cash flow as well as growth.”