Indicating the difficult times Australian businesses are going through, insolvencies in the country rose 12.1 per cent in the June quarter, according to the latest survey by credit agency Dun & Bradstreet.

The increase of insolvencies, which went up from 4.1 per cent in the previous quarter, happened while insolvencies globally are at their lowest levels.

Christine Christian, D&B chief executive, pointed out that outside the mining sector business sentiment is generally poor, exacerbated by the strong Australian currency which strains business profits.

"Insolvency activity in Australia is up across almost all sectors, with a significant deterioration in retail and service sector failures, reflecting subdued confidence," Ms Christian told the Herald Sun.

"The rise in insolvencies may have reflected knock-on, laggard effects of the 2008-09 global financial crisis as well as declines in business credit and relatively higher interest rates," News.com.au quoted the D&E executive.

The report came out a day after the National Bank of Australia released a survey that showed business confidence in Australia declined 10 points in August.

Ms Christian said that Australia is now in a similar situation as struggling European economies such as Hungary, Ireland, Italy, Portugal and Spain, which all registered sharp increases in insolvency risk.

Among advance economies, business failures dipped 5.7 per cent in the same quarter. In the U.S. the decline was 10.8 per cent, while it Britain it was down 17 per cent. Even among emerging economies, a similar phenomenon was reported. China logged 27 per cent reduction in insolvencies and South Africa 18.8 per cent.

Ms Christian forecast that because of the overall weak business confidence, business failures could rise again into 2012.

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