Number of Scots firms in distress halves over year

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THE number of Scottish businesses in “critical distress” has halved over the past year, according to figures from insolvency group Begbies Traynor.

Since the first quarter of 2012, levels of critical distress – where companies face court judgments totalling over £5,000 or winding-up petitions – have fallen by just over 50 per cent in Scotland against a UK fall of 34 per cent.

However, compared with the last quarter of 2012, businesses in Scotland saw a rise of 34 per cent in the first quarter of 2013 compared to a UK average rise of 8 per cent.

Begbies Traynor said the quarterly rise was largely due to seasonal trends that sees the annual peak of distress occur in the wake of Christmas.

Ken Pattullo, regional managing partner for Scotland, said the fact that Scotland has seen the biggest year-on-year fall in critical distress outside London was to be welcomed. But he sounded a note of caution on the “polarised fortunes of various sectors”.

“We could still see more retail and hospitality failures as sustained lack of spending by consumers kills off some cash-strapped businesses,” he noted.

While overall the business-to-business economy is starting to pick up, Pattullo said there was still a drought of funding for SMEs. He added that some key sectors, particularly construction, “can see very little light at the end of the tunnel”.