Firms have been hit hard by Covid and rising costs

Scottish companies are being wound up at the highest rate in more than a decade, according to official data.

The Accountant in Bankruptcy, Scotland’s insolvency service, said 1,132 firms became insolvent in Scotland over the 12 months to March this year.

That represents a rise of 32.6% on the previous year (854) and the highest since the 1,369 recorded in 2011-12.

It is 19.4% higher than the pre-pandemic level in 2019-2020 (948).

Personal insolvencies increased 3% (8,004) from the last financial year.

Richard Bathgate, chair of insolvency and restructuring trade body R3 in Scotland and restructuring partner at Johnston Carmichael, said: ““The Covid hangover continues to hit Scotland’s businesses hard.

“Creditors’ Voluntary Liquidation levels rose once again – to nearly double 2019’s figures, and to the highest levels on record. This suggests that more and more company directors are choosing to close their businesses before that choice is taken away from them, and that businesses who made it through the pandemic with support from the Government are considering whether the debt they’ve taken on is sustainable.

“However, the figures released today go beyond simply levelling out pre-COVID insolvencies. With labour, stock, and energy expenses all surging, even previously successful businesses are now turning to an insolvency process to resolve their financial difficulties.

“Though the economy has shown some unexpected resilience so far this year, with a record low of unemployment levels and rising business confidence, I think a further wave of insolvencies is inevitable in 2023 unless the picture drastically improves.”

The latest official figures show the Scottish economy continued to show resilience with GDP up 0.2% in February compared with the previous month. The January figure was revised down to a 0.5% increase against a previous estimate of 0.9%.