The number of companies going out of business has fallen significantly this year, with the rate of insolvencies falling to its lowest in two years, according to the latest insolvency index from information services company, Experian.

The report reveals that enterprises across the UK are now eight percent more likely to survive the next 12 months, rising from 79.46 in January 2009, to 81.16 in January 2010. The rate of insolvencies also dropped considerably, falling from 0.11% in December 2009, to 0.07% at the start of 2010, with just seven in every 10,000 businesses going bust this year.

Enterprises in the South West continued to show the most promise, boasting the highest number of companies expected to survive in 2010. While Yorkshire had a less successful start to the year, experiencing the highest rate of failures over the last month. Scotland was the only region to see the level of business closures rise year-on-year, with companies in London currently the most likely to survive.

The highest insolvency rates were among businesses with between 11 to 100 employees, while those with one or two team members experienced the least number of closures.

Commenting on the findings, Rolf Hickmann, managing director of Experian company PH, says, “It’s encouraging to discover that not since the current financial crunch started have so few firms become insolvent in a single month. Whilst it is too early to predict whether we are fully out of the woods, this does hint at an improvement in the health of UK businesses; something which is reinforced by the financial strength view provided by January’s data.”

However, not all craft businesses are convinced by the findings. Alex Wills, director of cardmaking and scrapbooking supplier Twiddley's, comments, “I am really surprised by the information in the report and would have thought the number of business insolvencies had actually risen over the last two months. We've certainly noticed a number of our customers disappear this year and while the report is definitely something to celebrate, I do wonder whether the fall in business closures during January might be abit of a fluke. After all, it can take up to 18 months for hidden cash-flow problems to properly manifest.”

He adds, “To be honest, I think we are going to see many more businesses go bust over the next year and while our sales seem to be holding up for now, we have definitely noticed that a lot of our customers – who consist primarily of craft shop owners, people working from home and eBay traders – have ceased trading during the last 12 months.”

Addressing the challenges of the year ahead, Mr Wills says, “Personally, I expect to see profits grow significantly over the next 12 months, as we generally find that whenever there is a big shake up, the weak disappear and the strong flourish. We have already seen the wedding side of the business pick up and are getting more and more enquiries from people starting up their own enterprises. So, I am definiitely feeling optimistic about 2010.”

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