Scotland faces ‘sustained increase’ in company administrations in Q1 2024

Scotland faces 'sustained increase' in company administrations in Q1 2024

The number of companies in Scotland filing for administration has hit its highest Q1 rate since before COVID-19, according to figures from Interpath Advisory.

Analysis of notices in The Gazette by Interpath shows there were 12 administrations in Scotland in Q1 2024, double last year’s corresponding figures (Q1 2023: 6). This represented the highest number of administrations for the first quarter of the year since before COVID-19 when there were 21 cases (Q1 2020).

The jump in cases, albeit from a low benchmark, was significant above the trend seen across the UK which saw a modest rise from 321 (Q1 2023) to 328 (Q1 2024).

Sectors impacted in Scotland by administrations include Business Services, Professional Services, Building & Construction and Retail.

Scotland faces 'sustained increase' in company administrations in Q1 2024

Alistair McAlinden

Commenting on the figures, Alistair McAlinden, managing director and head of Scotland at Interpath Advisory, said: “There has been a sustained increase insolvencies in Scotland and wider UK economy in recent years as government CV19 support has fallen away and businesses have been buffeted by labour and cost inflation, poor growth, a cautious consumer, and high interest rates.

“The relentless nature of these punishing trading conditions on company finances is unsustainable for many and we’re seeing that come through in rising administration numbers.”

Mr McAlinden continued: “From what we’re seeing on the ground, cashflow pressure is, for many businesses, proving to be the tipping point.

“Costs have hammered margins, with many management teams also finding it hard to generate the revenues that will give them sufficient breathing room.

“A stubborn base rate and tight covenants with lenders combine to make the hard wall that they can then come up against.”

He concluded: “Looking ahead, we expect that the administration numbers will continue to rise and to surpass the peak we saw immediately before COVID-19 in 2020.

“That point of inflexion is likely to come towards the end of this year and will represent an important marker in the re-adjustment of the UK economy.

“That’s why it is so essential that businesses seek support as early as possible as it can give them the best chance of a positive outcome.”

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