Michelle Elliot, a restructuring advisory partner at FRP, explained that many businesses are running on “limited financial headroom” due to higher operating costs, tighter margins and subdued demand.

Figures from the Accountant in Bankruptcy (AiB) reveal that total corporate insolvencies in Scotland dropped 27.7% year-on-year in Q1 2026–27: falling from 332 to 240 cases.

Compulsory liquidations saw a sharp decrease from 167 to 97 over the same period, while members’ voluntary liquidations (MVLs) rose 6.7% from 119 to 127. Despite the quarterly decline, overall corporate insolvencies remain above pre-pandemic levels.

She said: “Fewer insolvencies are encouraging, but the underlying pressure on businesses hasn’t disappeared. Higher operating costs, tighter margins and subdued demand mean many firms are still running with limited financial headroom, so one month of improvement shouldn’t be treated as a turning point.

“Attention will now turn to the upcoming Budget, where businesses will be looking for greater clarity on the economic direction ahead. A clearer, more stable outlook could give firms the confidence to move forward with investment, hiring and growth plans that have been difficult to commit to while conditions have remained uncertain.”

“Our research shows slow decision-making is costing the UK mid-market up to £13.7bn in economic output each year. Businesses that use any breathing room to address difficult decisions now - rather than waiting for conditions to become easier - can put themselves on a much stronger footing for the months ahead.”