Business failures rise amid Brexit turmoil
SCOTTISH corporate insolvencies were in 2019 at their highest level since 2012, after an eight per cent year-on-year rise in the fourth quarter amid continuing Brexit uncertainty, official figures show.
The rise in business failures north of the Border was described by UK insolvency and restructuring trade body R3 as a “worrying sign”.
The number of corporate insolvencies in Scotland last year totalled 980, up by 3.6% from 946 in 2018.
In the October to December period, there were 226 corporate insolvencies in Scotland, up from 210 in the same period of the previous year, the figures published yesterday by the Accountant in Bankruptcy show. These figures exclude administrations.
The rise in corporate insolvencies last year occurred against a backdrop of continued heightened uncertainty in the wake of the Brexit vote in summer 2016.
Tim Cooper, who chairs R3 in Scotland, said: “The higher level of corporate insolvencies in Scotland in 2019 compared with previous years is a worrying sign that conditions may be harshening for Scottish enterprises. The figures released [by the AIB] do not include administrations or company voluntary arrangements either, meaning the true extent of Scottish business difficulties could be even higher.”
He added: “If one word could be said to sum up 2019, there’s an argument to be made for it to be ‘uncertainty’. Brexit uncertainty led to many companies understandably taking a wait-and-see approach on everything from new equipment to decisions about opening offices. This in turn added sand to the wheels of dealmaking and business investment, with knock-on effects for the economy as a whole.”
The UK is due to leave the European Union on January 31, following Boris Johnson’s General Election victory last month. With the Prime Minister having ruled out extending the transition period beyond the end of this year, fears of a no-deal departure remain elevated. Experts have
flagged challenges in securing a future trade deal with the EU in such a short timescale.
R3 highlighted the impact of Brexit on companies last year in terms of stockpiling activity ahead of March 29 and October 31, previous deadlines for leaving the EU which were not met.
Mr Cooper said: “Companies also had to cope with stop-start stockpiling over the course of 2019, as they prepared for the putative Brexit dates in March and then October.
“Increased levels of business activity before these dates were offset by slacker demand after them, as companies used up their stockpiles rather than ordering new inputs or products.”