However, restructuring and insolvency body R3 has warned that the headline figures mask rising financial distress for businesses and individuals amid significant economic uncertainty.

Corporate insolvencies fell to 298, a 5% decrease compared to the same period last year and a 10% drop from the previous quarter. Despite this, Emma Widdowson, chair of R3 in Scotland, noted that ongoing uncertainty surrounding the UK and Scottish budgets is causing businesses to hesitate on investment and expansion. She highlighted Office for National Statistics data showing that one in six trading businesses had no cash reserves in late September, leaving them highly vulnerable to financial shocks.

On the personal insolvency front, figures dropped by 8% from the last quarter to 1,780. This overall decrease was contrasted by a sharp 27.9% year-on-year increase in bankruptcies. The decline in alternative debt solutions, such as Protected Trust Deeds, suggests that intense pressure on household budgets is forcing more people into the more severe option of bankruptcy.

Ms Widdowson, who is also legal director at Addleshaw Goddard, said: “Widespread increases in essential bills for energy, food and fuel, combined with rising housing costs, have placed significant pressure on household budgets”.

She expressed concern that people may turn to credit to cover basic expenses over Christmas, increasing the risk of unsustainable debt.

Ms Widdowson concluded: “Taken together, this forms a continued strain across both the corporate and personal sectors. Businesses are grappling with a complex mix of financial and operational challenges, while individuals are facing more pressure on their personal finances. 

“As always, our message remains clear: businesses or individuals experiencing financial distress should seek expert advice from a regulated professional as early as possible. Early intervention provides more options to engage with creditors and more time to make a considered decision about how to best move forward.”