THE number of Scottish businesses failing in the first three months of 2018 increased by 38 per cent compared to the same period last year KPMG has found.

However, the longer term trend appears more reassuring with the number of insolvencies down 5% in the year to March.

KPMG said while sectors such as retail are under pressure insolvency rates are in line with the historic trend.

The accountancy firm found that 233 businesses entered insolvency proceedings in Scotland in the first three months of 2018, against 169 in the first quarter of 2017.

Some 897 firms failed in the year to 31 March, down from 942 in the preceding 12 months.

“Although corporate insolvencies increased in Q1 compared to the same period last year, the statistics don’t reflect the wider picture,” said Blair Nimmo, global head of restructuring for KPMG. He noted corporate insolvencies fell to an eight-year low at the end of 2017.

Mr Nimmo added: “On the whole, insolvencies are falling compared to the previous 12 months and generally fall in line with what are relatively normal attrition rates.”

Regarding sectoral challenges Mr Nimmo said retail and casual dining businesses had to evolve amid cost increases and a squeeze on household incomes.

The construction sector faces pressures but demand for building services remains high.

“Overall in Scotland, I sense that most businesses are adopting a fairly cautious strategy in light of political and economic uncertainty,” said Mr Nimmo.

The analysis covers firms entering liquidation, administration or receivership.