Scottish business failures rise but outlook remains positive

The number of Scottish businesses failing in the first three months of 2018 has increased compared to the same period last year, but the long-term trend suggests the business landscape remains stable, according to professional services firm, KPMG.

In the first quarter of this year, the total number of business insolvency appointments increased by 38 per cent (233 up from 169), compared to the same three months in 2017 (Jan to March).

A 12-month comparison, however, sees total insolvencies fall by five percent (897 down from 942), representing relatively normal levels.

Blair Nimmo, global head of restructuring for KPMG, said: “Although corporate insolvencies increased in Q1 compared to the same period last year, the statistics don’t reflect the wider picture. The end of 2017 saw corporate insolvencies at an eight-year low – an achievement, considering long running levels of uncertainty coupled with wider global pressures – and so these figures need to be put into context.

“On the whole, insolvencies are falling compared to the previous 12 months and generally fall in line with what are relatively normal attrition rates.

“Nevertheless, sectoral challenges remain. Retail and casual dining must evolve due to cost increases and changes in consumer spending habits due to pressures on household incomes squeezed by inflation and relatively stagnant wages. Many businesses rely on the festive period to boost sales, but even so, some well-established brands have had to face significant branch closures in recent months as a result of those challenges.

“The construction industry, which is often seen as a bellwether for the wider economy also faces pressures. However, demand for building services remains high and we expect the sector to continue growing. Overall in Scotland, I sense that most businesses are adopting a fairly cautious strategy in light of political and economic uncertainty.”