A FALL in the number of Scottish businesses going bust in the first quarter of the year has pointed to a strengthening business environment.
The latest statistics from KPMG show a 21 per cent fall in corporate insolvencies in the opening three months of 2015 compared to the same period in 2014, and a 10 per cent drop compared to the last three months of 2014.
Blair Nimmo, head of restructuring for KPMG in Scotland, said the figures were clear evidence that businesses are generally in a strong position as they enter the second quarter of 2015.
“Buoyed by an overarching recovery, economically we’re seeing a positive trading environment for both large and smaller organisations in Scotland, which is reflected by the drop in insolvency appointments,” said Nimmo.
“That being said, volatility in oil prices as well as uncertainties around the outcome of the general election may have wider repercussions for the economy as businesses adopt a ‘wait and see’ approach to growth.”
Administrations, which typically affect larger organisations, saw a rise of 5 per cent (from 19 to 20) compared with the same period in 2014 but remain far below the average number of businesses going under during the height of the recession.
A quarter-on-quarter comparison shows a similar increase, with two more businesses going into administration in 2015 than in the last three months in 2014.
Liquidations, which tend to affect smaller businesses, fell by 24 per cent in comparison to 2014’s figures (220 to 168) and 13 per cent against the last three months of 2014.
Nimmo said KPMG’s restructuring advisory and debt advisory practices remain busy dealing with issues which remain critical to many businesses including pension deficits, working capital management, cost reduction and refinancing.
The figures came a day after data from business rescue and recovery specialist Begbies Traynor showed levels of financial distress at Scottish firms were static.
Scotland’s firms showed 12,041 instances of “significant” financial distress, the signals that indicate the early signs of financial trouble, between January and March 2015.
The total is almost identical to the previous quarter’s 11,989 reported instances.
Ken Pattullo, group managing partner in Scotland for Begbies Traynor, said: “The referendum put the brakes on investment in Scotland for some time, and to have a general election so soon after that uncertainty has compounded a period of very little long term investment in the country.”
There were slightly fewer instances of less common “critical” business distress – which include winding up petitions – with numbers down by 5 per cent in the last quarter compared to the previous three months according to the latest Begbies Traynor Red Flag research. This follows a fall of 18 per cent in the previous quarter.
The professional services sector (down 27 per cent), leisure and culture (down 25 per cent), and telecoms and technology firms (with a 24 per cent reduction) saw the biggest falls in distress levels.
l The over 65s added £37 billion to the UK economy through spending on the hospitality and leisure sector in the last year, according to research from Barclays.
The contribution was over a third (36 per cent) more than the average consumer and 27 per cent higher than the 35-54 year olds who are the second biggest spending generation.