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'Still causes of concern' in economy

Business failures fall to eight-year low

Blair NimmoThe number of businesses failing in Scotland fell to an eight-year low last year, according to KPMG.

The firm’s latest insolvency statistics reveals the number of corporate insolvencies at the end of 2017 stood at 832, a figure not seen since 2008 (803).

An annual comparison with 2016 shows a 15% fall in the number of insolvencies (832 down from 984). However, the last quarter of 2017 saw a 14% increase in insolvencies when compared to the same three months in 2016 (251 up from 221).

Administrations, which typically affect larger organisations, fell by 14% in the past 12 months (83 down from 97). A quarterly comparison shows from October – December 2017, the number of administrations fell by 38% compared to the same period in 2016 (15 down from 24).

Liquidations, which tend to affect smaller businesses, fell by 16% in 2017 (749 down from 887). A quarterly comparison reveals from October – December 2017, the number of liquidations increased by 25% compared to the same three months in 2016 (236 up from 189).

Blair Nimmo (pictured), global head of restructuring at KPMG, said:Although we saw a small rise in insolvencies in the quarter ended 2017 compared to the same period in 2016, this does not necessarily signal a fall in the fortunes of Scottish businesses.

“The figures must be viewed in the context of decreases over a six and 12-month comparison, by seven percent and 15% respectively. Indeed, annually, it is encouraging to see the number of business failures falling to an eight-year low, representing what are relatively normal attrition rates.

“Nevertheless, other economic indicators are not so positive in a UK context, and the general direction of travel in the Scottish economy remains uncertain. Coupled with comparatively poor GDP forecasts and a low rate of business birth rates, there are some causes for concern.

“A continuing uncertain political and economic climate, whether in Scotland, or anywhere else in the UK, means businesses remain cautious, and I do not see this changing in the immediate future.

“From a sector perspective, we continue to see retail grabbing most of the headlines across the UK and to a lesser extent in Scotland where sadly, in Kilmarnock, we saw the collapse of James H Donald.  

“Overall, however, rather than formal insolvency proceedings we continue to be busy, primarily advising SMEs across Scotland on a variety of matters including raising new finance, preparing updated financials, negotiation with creditors, alongside various cost reduction and working capital initiatives.”

 

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