Iain Fraser

This reflects a substantial 19.9% increase from 2019’s pre-pandemic statistics. However, when set against the previous quarter’s figures, there was a marginal 3.1% reduction from 292 cases.

Simultaneously, personal insolvency statistics, which encompass bankruptcies and protected trust deeds, remained relatively stable with a 0.05% dip, translating to one case, giving a total of 2,074 cases for Q2 2023-2024. This is a notable 40.2% decline from levels recorded prior to the pandemic in 2019. A decrease of 1.3% was observed compared to the Q2 figures from April-June 2023, which reported 2,102 cases.

Iain Fraser, chair of the Scottish Technical Committee at R3, the UK’s insolvency and restructuring trade body, expressed concerns over the significant increase in compulsory liquidations, attributing it to creditors intensifying their efforts to recover debts, noting that “the year-on-year rise in corporate insolvencies has been driven by an almost 35% rise in compulsory liquidations”.

Mr Fraser added: “Business owners are also feeling the squeeze from the recent rise in the corporate tax rate to 25%. With a higher tax burden, profitability takes a hit and less money is left to invest in growth or put away for more challenging times – both of which add unwelcome additional pressure.

“One positive over the last three months has been the economic boost brought about by the Edinburgh Fringe Festival. With more tourists, and even Scots choosing to stay close to home for the summer holidays, local businesses saw a much-needed lift and hopefully this will be mirrored over the next quarter as we move towards Christmas, with more people deciding to shop and spend money locally.”

Regarding personal insolvencies, Mr Fraser commented: “the numbers have held steady compared to Q2 last year, indicating that people in Scotland are still facing financial difficulties due to the high cost of living.

“Personal insolvency levels have fallen since before the pandemic, driven by a fall in both bankruptcies and protected trust deeds, so while there has been some improvement since the pandemic’s peak, the economic impact remains considerable.

“Inflation and rising interest rates continue to bite Scottish households. High costs across the board, from mortgage prices to energy bills mean making it through the month without relying on forms of credit is getting harder and harder, while the cost of food remains a major concern for many.”

He continued: “As we move into Q3, there’s a growing worry that more families will face the difficult choice between heating their homes and putting food on the table – a position no one wants to be in.

“For those renting, there is some relief as the rent cap has been extended for an extra six months. This news comes as a welcome respite for those already struggling with high everyday costs and will hopefully ease some concerns about having to manage the added burden of increased rent on top of already stretched budgets.

“The recently announced freeze on council tax will also provide some financial relief, but as this comes into effect next year, the impact of these measures might not be felt for another six months or more.”