Calm before storm warning as Scottish business distress levels steady

Business distress levels in Scotland have steadied but insolvency experts are warning of the “calm before the storm” amid growing inflationary pressures.

The latest Red Flag Alert data from business rescue and recovery specialist Begbies Traynor reveals a 1 per cent fall in “significant” or early-stage distress in Scotland in the first quarter compared with the closing three months of 2021, mirroring the picture across the rest of the UK.

There was a marked fall in this type of distress, which refers to companies that have financial problems such as minor decrees of less than £5,000 filed against them, compared with the same period the previous year when the country was still in lockdown. Significant distress in Scotland fell by 22 per cent on that year-on-year comparison, slightly above the UK-wide figure of a 20 per cent decrease.

North of the Border, 29,538 businesses experienced instances of significant distress in the first quarter of the year, while 581,596 businesses across the UK were seeing early-stage distress.

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Ken Pattullo of Begbies Traynor said: “While the levelling off of distress appears to be an encouraging sign, it is vital that business owners are not complacent and prepare themselves for some challenging times ahead.

“After the turmoil of the pandemic, many have already eaten into cash reserves and with soaring energy prices being exacerbated by the situation in Ukraine, as well as continued supply chain disruption as China enforces further lockdowns, we expect the next 12 months to be far from easy,” he added.

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Ken Pattullo of Begbies Traynor said it was vital that businesses prepare themselves for 'some challenging times ahead'.
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