Critical distress up more sharply in Scotland

THE number of businesses in Scotland showing signs of “critical distress” showed a sharp year-on-year rise in the first quarter, with the increase slightly sharper than that in the UK as a whole.

Business rescue and recovery specialist

Begbies Traynor flagged a “tough economic backdrop” throughout the UK, highlighting “sticky” inflation.

The firm’s latest red flag alert report shows there was a 22.6% increase in “critical” or more advanced distress among Scottish businesses in the first quarter compared with the same period last year.

This type of severe distress affected more than 2,060 businesses in Scotland, Begbies Traynor noted.

It observed that there was a 20.1% year-on-year rise in critical distress among businesses in the UK as a whole in the first quarter, with more than 40,170 businesses affected.

Comparing the first quarter with the final three months of last year, critical distress among Scottish businesses was down 8%. This was a lesssharp fall than a corresponding decline of 15.4% in the UK as a whole.

Begbies Traynor said: “Of the 22 sectors analysed in Scotland, 13 saw rises in critical distress in the first quarter of the year compared with the first three months of 2023. The most badly affected were print and packaging, with a 166.7% rise; followed by food and drugs retailers, up by 102.7%; travel and tourism, up by 83.3%; and food and beverages, up by 77.8%. Property and real estate, and construction also saw marked year-onyear increases, with rises of 60.2% and 30% respectively; while professional services rose by 23.3%.”

Ken Pattullo, managing partner of Begbies Traynor in Scotland, said: “In Scotland, it’s evident that both business-tobusiness and consumerfacing sectors are suffering as many people continue to struggle from the pressure of rising prices and are yet to feel that the UK economy is on the road to recovery.”