Eileen Blackburn

The latest Accountant in Bankruptcy (AiB) figures show that 945 Scottish firms failed during 2018 compared with 780 the previous year.

Eileen Blackburn, head of restructuring and Debt Advisory at the firm, explained: “The increase in the number of corporate insolvencies in 2018 is of great concern. This is the highest annual figure since 2012 and is the fourth highest figure ever.”

“That this is happening when interest rates are at historically low levels, when unemployment is at a record low of 3.7 per cent of just 100,000 people, and the economy is growing indicates something more fundamental is happening. Problems with the viability of the High Street, continued uncertainty over Brexit and the consequent reduced investment, and shifting consumer buying have all had an impact.”

Ms Blackburn continued: “The problem is that with interest rates only going one way, with continuing confusion over the UK’s future relationship with Europe, and with the political situation in turmoil it seems likely that many businesses will face even more difficulties in the coming year. Those with close economic ties to the EU or who rely heavily on European staff in areas such as hospitality, retail, and agriculture will all have serious financial issues to address in the coming year.”

She added: “The continued problems in the High Street will undoubtedly lead to more failures of retailers, casual dining outlets and other stalwarts of our town and city centres. Meanwhile the restructuring of major players in the construction industry could have long-term knock on effects on the viability of many smaller, suppliers and contractors in the sector. Any business experiencing any signs of financial issues should seek to address these immediately before the problems become unsurmountable.”

Tim Cooper, chair of R3 in Scotland, the insolvency and restructuring trade body expressed similar worry over the data.

He said: “It’s not especially surprising to see corporate insolvencies in Scotland at a higher level in 2018 than in the previous year, as 2017 recorded the lowest number of annual corporate insolvencies for quite some time.

“It is also worth noting that we may not be seeing the whole picture, as the statistics do not include administrations or company voluntary arrangements, nor the number of companies which were rescued outside of a statutory insolvency procedure.

“That said, the year on year increase in liquidations is nonetheless concerning. Consumer confidence in Scotland has been firmly in negative territory all year, and – as the higher number of personal insolvencies in Scotland confirms – many people are at the reaches of their personal budgets with no extra cash.”