Scottish firms are 'less distressed'

SCOTTISH firms were "less distressed" during the fourth quarter than those in other parts of the UK, a report claimed today.

The number of distressed businesses rose by 15 per cent in Scotland in the final three months of 2010, compared with a 20 per cent increase for the UK as a whole.

Year-on-year, the UK figure rose by 4 per cent, while the Scottish total fell by 1 per cent.

Throughout the UK, almost 148,000 UK firms are facing "significant" or "critical" financial problems, whilst those with "critical" problems alone are struggling with nearly 53 billion worth of liabilities, according to the quarterly Red Flag report by accountancy firm Begbies Traynor.

Ken Pattullo, the firm's group managing partner in Scotland, said: "That Scotland's businesses have seen less distress than the rest of the UK is remarkable, as we have been bearing the brunt of the recession and seeing more than our fair share of problems for the past two years.

"But I am afraid the longer-term picture isn't as rosy as these statistics first appear. We must bear in mind that with a heavy reliance on the public sector, and the full impact of the UK government spending cuts yet to filter through to most businesses, we actually face more issues in Scotland than elsewhere.

"This likely to be felt later in the year, after the Holyrood elections, as well as the inevitable pressure as HMRC's flexibility on time to pay (tax bills] reduces."

Official figures published last week by the Accountant in Bankruptcy showed that a record number of Scottish firms went to the wall last year. Almost 1,100 Scots businesses failed in 2010, the highest ever figure and a 46 per cent increase on 2009.