THE number of small businesses collapsing into insolvency this year has fallen by 15pc compared with the first three months of last year, and could soon return to levels not seen since the 1970s, claims credit information group Dun & Bradstreet.
The fall has been evident in all parts of Britain except London, where failures rose by 1pc, and Scotland, where a 28pc increase reflected changes in Scottish bankruptcy laws. Philip Mellor, the Dun & Bradstreet analyst responsible for the figures, said: "1995 looks set to see the largest drop in business failure among small businesses for at least 15 years."
But the announcement of the figures coincided with a warning published yesterday that small businesses are still suffering from late-payment problems and cannot expect a recovery unlessinterest rates fall quickly.
The warning came from economics professor Patrick Minford, one of the Chancellor of the Exchequer's six Wise Men. In research prepared for the trade credit insurance group Hilton Malcolm Underwriting, Mr Minford says: "For small businesses to survive, it is vital for them to preserve their cashflow. Recent increases in interest rates, together with higher taxes and mortgage burdens, are preventing a revival.
"Unless rates peak and begin to fall again soon, the only feel-good factor people will experience will be the relief at arriving at work on a Monday to discover that they still have a job in a business that is still trading."
The Dun & Bradstreet numbers, which are expected to be closely reflected in official figures when they are published, show major falls in the number of businesses failing in the South East outside London. This region accounts for more than a quarter of all the country's collapses but the number of bankruptcies there fell by 24pc to 1,532 in the last three months, while the number of liquidations fell by the same proportion to 764. Bankruptcies fell in London to 420 but liquidations rose to 1,427. In the South West, the number of failures fell 28pc to 1,203 while the North West had a 20pc fall to 873. Welsh failures fell by 30pc.
Although small businesses account for a quarter of all corporate sales and employ a third of the private sector workforce, they export less of their production than larger companies which are currently benefiting from Britain's surge in exports. But Mr Mellor said: "We're seeing the smaller business sector improving on the back of the larger companies." But he said: "There are still sectors that are doing extremely badly. Construction is not doing as well as last year. And, while the total figures have come down, just under 450 businesses are failing each week and there are still companies living on a knife's edge."
