Signs of distress on the rise among Scottish companies

The number of Scottish firms seeing instances of 'significant' business distress is rising rapidly, according to new figures.

Ken Pattullo of Begbies Traynor said there was a 'stark' difference between the fortunes of some sectors. Picture: Richard Campbell

The Red Flag Alert data from business rescue firm Begbies Traynor showed a jump of 11 per cent in the last three months of 2016 compared to the previous quarter and a three per cent year‑on‑year rise.

Instances of “critical” distress levels, which include winding-up petitions, rose by 2 per cent quarter on quarter, but fell by 56 per cent compared with a year ago.

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The sharp annual fall was attributed largely to a recovery in the construction, real estate and hospitality sectors that have fared well compared to the same period in 2015.

But the figures also show that the logistics, manufacturing, media and travel sectors are all facing double digit rises year‑on‑year.

Ken Pattullo, who leads Begbies Traynor in Scotland, said: “The fall in critical instances is overshadowed by the overall rise in more common significant distress levels, and the gap between the fortunes of some sectors is stark.”

In total, firms in Scotland showed 14,380 instances of significant business distress in the fourth quarter of 2016, with 93 per cent being reported from SMEs and 7 per cent from larger firms.

Aberdeenshire businesses were particularly hard hit, showing 998 instances of significant distress, up by 10 per cent year on year.

“The impact of the oil and gas industry downturn continues to filter gradually through the whole economy,” said Pattullo.