'More than fair share of pain' for Scots firms

Published on Tuesday 12 October 2010 23:13

LEVELS of financial distress among Scottish firms are falling at a much slower rate than those south of the Border, a survey warned yesterday, while the situation is set to worsen once looming public sector cuts bite.

The warning came ahead of today's quarterly report from the Scottish Chambers of Commerce (SCC), which suggests that economic growth slowed during the third quarter.

The SCC's report - compiled with Strathclyde University's Fraser of Allander Institute - said that uncertainty over the pace and impact of public sector cuts is "sapping business confidence".

Yesterday's "red flag" report from accountancy firm Begbies Traynor showed that the number of firms in financial distress in Scotland fell by 2 per cent year-on-year, compared with a 10 per cent decline for the UK as a whole.

More than 50,000 companies throughout the UK fell into financial difficulty in the third quarter, including 7,600 in Scotland.

Ken Pattullo, managing partner in Scotland for Begbies Traynor, said: "Scotland's businesses are seeing a longer period of hardship than many other parts of the UK. With the looming public sector impact of the much-anticipated comprehensive spending review, we are bracing ourselves for more than our fair share of the pain."

He added: "The rise in winding-up petitions by HM Revenue and Customs shows an appetite to recover more tax revenues from both businesses and individuals alike, and businesses will see this activity increase, coupled with pressure as VAT rises."