The Scotsman

£35bn tied up in day to day business running cost

- By MARTIN FLANAGAN

Scottish businesses have £35.6 billion tied up in excess working capital that could otherwise be used to bankroll growth, says a new report today.

The Bank of Scotland (BOS) notes: “Sustained economic growth and the fall in the sterling exchange rate have put pressure on businesses in Scotland to increase the amount of money tied up in working capital, leaving them at risk if growth were to weaken in the months ahead.”

The amount given over to working capital is up 13 per cent from £31.5bn since the last report in May. It means that firms “could struggle to free up cash either to grow or to weather turbulent financial conditions,” the report adds.

Increased levels of cash used in the day-to-day running of manufactur­ing and services businesses had been triggered by the weak pound, a consequent­ial rise in input costs and forward purchasing of inventory, it said.

The BOS report said the rise in working capital had also been aided by the small recovery in the oil price.

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