A SURGE in financial distress among companies in Scotland’s construction and retail sectors has been revealed in a key survey.
The quarterly Red Flag Alert, published yesterday by accountancy firm Begbies Traynor, shows an increasing number of companies in distress across a range of consumer-facing sectors, including leisure and culture, and sport and health, as well as retail.
The survey reveals that “significant” distress levels in Scotland in the third quarter were up by 27 per cent on the same period of last year, to affect 24,000 businesses. The UK as a whole also saw a 27 per cent year-on-year rise in “significant” business distress during the three months to September, against a backdrop of weak economic growth.
“Significant” distress covers businesses with decrees filed against them, or those showing a marked deterioration in key financial ratios. Begbies Traynor notes this is often a precursor to more serious, or “critical", distress, which describes businesses that have had decrees totalling more than £5,000 within a three-month period or winding-up petitions against them.
Across Scotland, construction is the sector with the highest number of distressed businesses. A total of 3,421 Scottish building firms were affected by financial problems in the third quarter, up by 26 per cent on a year earlier.
Retail is the sector with the second-greatest number of distressed businesses in Scotland, with a year-on-year rise of 22 per cent to 1,775 in the third quarter.
Begbies Traynor also flagged rising numbers of companies in distress in Scotland’s manufacturing, telecommunications, and professional services sectors.
Ken Pattullo, who heads Begbies Traynor in Scotland, said it was worrying distress levels in Scotland and throughout the UK were rising “so decisively”.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here