Number of Scots firms in critical distress surges amid uncertainty
THE number of firms in advanced financial distress surged in Scotland in the last quarter according to research findings which highlight the pressure on sectors such as retail amid uncertainty about the outlook for businesses.
Begbies Traynor found the number of firms in critical distress in Scotland increased by 71 per cent in the last three months of 2018, to 101, compared with 59 in the same period in the preceding year.
The business recovery specialist noted the biggest increases were seen in the general retail, professional services and hotels and accommodation sectors. The number of firms in critical distress in those sectors rose by 350%, 200% and 150% respectively.
The head of Begbies Traynor in Scotland, Ken Pattullo, said: “Financial woes are hitting firms across the board, affecting both consumer-facing and business-to-business sectors as both individuals and firms suffer from the ongoing uncertainty and falling confidence.”
He noted that the trend in Scotland is markedly worse than across the UK as a whole in terms of advanced distress. The number of firms under that heading rose 25% annually in the last quarter in the UK.
Levels of critical distress increased by 7% in Scotland compared with the third quarter but fell by 1% across the UK.
Cases of critical distress rose in 19 sectors year on year in Scotland in the last quarter. The numbers only fell in the financial services and leisure and cultural services sectors.
The critical distress numbers in the Red Flag report include businesses that have had winding up petitions or decrees tot alling more than £5,000 against them.
The number of firms showing early signs of financial difficulties in Scotland, including having minor decrees against them, moved in line with the UK, rising 3% on the preceding three months but falling 2% annually.
Last week official figures showed the number of firms entering liquidation in Scotland rose 21% in 2018 to a six year high of 945, from 780 in 2017.