Accountant in Bankruptcy’s (AiB) has published its latest provisional figures ( January to March 2019) which show that there were 966 Corporate insolvencies in Scotland in 2018-19 up from 884 last year.
Commenting on the latest figures, Minister for Business, Fair Work and Skills Jamie Hepburn said “These figures highlight the challenging economic times we are facing with more Scots experiencing increased financial pressures. The ongoing uncertainty around EU exit bears much of the blame.”
“In this climate, it is more important than ever that people encountering financial difficulty seek early advice and the appropriate solution. It is welcome to see an increase in the number of Scots accessing the Scottish Debt Arrangement Scheme which helps them to pay back their debts. Recent reforms to the scheme will also allow more individuals in Scotland to benefit from this initiative going forward.
“The Scottish Government urges those in financial distress to obtain money advice at the earliest possibility in order to take control of their finances and ensure the right debt solution is found to suit their circumstances.”
Commenting on the Scottish Insolvency Statistics, Duncan Swift, Vice President of R3, the insolvency and restructuring trade body said “The number of corporate insolvencies in Scotland rose by 34% in January-March 2019 compared with the previous quarter (October-December 2018), and rose by 8% compared with the same quarter the previous year (January-March 2018).”
“The jump in the number of corporate insolvencies in Scotland in the last quarter continues a long-standing trend, and indicates that many companies are finding market conditions tough at the moment. Many distressed companies, especially in the retail and restaurant sectors, will have put their heads down and tried to get in as much cash as possible over the busy festive period – leaving difficult conversations about future options to the cold light of the New Year.”
“Although GDP growth in Scotland in the final quarter of 2018 outpaced the UK as a whole, its expansion rate of 0.3% is still relatively sluggish, and masks a fall in the production sector’s output of 0.9% over the same period.”
“After spending all of 2018 in negative territory, consumer confidence in Scotland saw a further notable drop in the first quarter of this year, to -9.6. House price falls in some areas will also make people feel worse off, and perhaps less inclined to spend on non-essentials. This is definitely bad news for all companies which rely on the consumer pound, as has been very evident from the well-publicised troubles in the restaurant sector, especially among casual dining chains, and on our high streets.”
“Unsurprisingly, Brexit is still making an impact on Scottish businesses here and now, as they put off investment in new equipment or processes, or build up stockpiles of essential supplies to insulate themselves from possible shocks in the future. With uncertainty making business decisions trickier than usual, it has been simpler for Scottish firms to take on extra staff, rather than to spend money on new machinery or software. As unemployment is low, companies are feeling the pressure to raise wages to attract new staff, especially outside major cities and larger towns.”
“On the plus side, our whisky industry is doing a roaring trade. If 2019 matches the 8% growth in exports seen in 2018, this will give a boost not just to the whisky sector, but to other areas such as tourism and transport. With interest growing in craft spirits and as plans to open new distilleries progress, Scotland’s economy as a whole should benefit.”
“With small and medium-sized enterprises forming the cornerstone of the Scottish economy, their relative flexibility may help them to adapt to changing market conditions – although expert advice can often prove helpful, to businesses of any and every size and shape. Directors who are unsure as to the best route forward, or who are worried about their company’s viability, should seek qualified advice from a professional source such as an insolvency practitioner at the earliest opportunity.”