CORPORATE insolvencies in Scotland in the last quarter were up on the same period of 2017, official figures show, amid continued weakness in consumer sentiment.
The figures, published yesterday by the Accountant in Bankruptcy, show there were 232 corporate insolvencies in Scotland in the July to September quarter, up by nearly four per cent on the same period of last year.
In the April to June quarter, there were 245 corporate insolvencies, up sharply from 200 in the same period of 2017.
Tim Cooper, who chairs insolvency and restructuring trade body R3 in Scotland, said: “There were…more corporate insolvencies than in the same quarter last year, which underlines that many parts of the Scottish business community are experiencing difficult trading conditions.”
Eileen Blackburn, head of restructuring and debt advisory at accountancy firm French Duncan, welcomed the fall in Scottish corporate insolvencies between the second and third quarters of this year but noted business failures north of the Border remained “at a relatively high level”.
There were 736 corporate failures in the first nine months of this year, compared with around 780 for the whole of 2017.
Ms Blackburn said: “We are on target to have almost 1,000 corporate failures this year, which has not happened since 2012 and has only happened in the three years of 2010, 2011 and 2012, indicating a trend of rising insolvencies and business collapse.”
Mr Cooper noted that solid quarter-on-quarter Scottish economic growth in the three months to June, the latest period for which official figures are available, would have provided a boost to companies. He highlighted a rebound in construction output but flagged continuing pressure on consumers.
He said: “The July-September [insolvency] numbers are coming off the back of a relatively strong performance for the Scottish economy in the April-June period, when GDP (gross domestic product) grew by 0.5%, which will have helped many companies. The construction sector in particular will have breathed a sigh of relief as its output grew 1.8%, rebounding from the poor performance in the first three months of 2018.”
He added: “Consumer sentiment has been in negative territory in Scotland since the second half of 2016, while house price growth has been positive but not outstanding. Both of these factors will have constrained consumer spending, which underpins a large portion of overall economic activity. No company reliant on consumer spending can afford to be complacent.”
The AiB figures do not include administrations. The number of large Scottish businesses falling into administration in the third quarter was, at 17, down 29 per cent on the same period of 2017, according to KPMG.
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