Mixed fortunes for Scottish business as travel suffers and construction sees recovery - Begbies Traynor

Businesses in Scotland saw a very mixed final quarter of 2016, according to data released today by business rescue and recovery specialist Begbies Traynor, with some sectors seeing improvements whilst other industries were battered by the uncertainty in the economy.

Scottish firms saw instances of ‘significant’ business distress, the most common indicators of less serious problems, rise by 3 per cent year on year and 11 per cent since the previous quarter, exactly tracking the UK average in the last three months of 2016.

Red Flag Alert data which is released every three months and measures the financial distress within the region’s businesses, also showed that instances of ‘critical’ distress levels in Scotland, which include decrees totalling over £5,000 and winding-up petitions, rose by 2 per cent quarter on quarter, but fell by 56 per cent compared with a year ago.

This fall was attributed largely to a recovery in the construction (-52 per cent), real estate (-67 per cent), bars and restaurants (-90 per cent) and hotel (-83 per cent) sectors that have fared well compared to the same period in 2015, and masked a tough period for many of Scotland’s other sectors.

Ken Pattullo, who leads Begbies Traynor in Scotland, said: “The headlines in Scotland are rising levels of distress, but there is a very patchy recovery that has seen some beleaguered sectors seemingly emerge from the troughs seen in late 2015. It was then that we saw record levels of distress in the hospitality, building and property businesses, which have all seen a reduction in problems, and despite a gloomy overall picture that is welcome news.”

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 only 7 per cent from larger firms.

“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. Logistics, manufacturing, media and travel sectors are all facing double digit rises year on year, and the construction, printing and automotive industries are seeing significantly reduced distress,” said Mr Pattullo.

“Aberdeenshire businesses were particularly hard hit again, showing 998 instances of significant distress, up by 10 per cent year on year and 15 per cent since the last set of stats was released in October. The region has suffered the brunt of the impact of the oil and gas industry downturn, and this continues to filter gradually through the whole economy.

“Without the rally in construction, property and leisure related industries the numbers would have made for even worse reading, and we just have to hope that the reversal of this trend is long term, and we see continued improvements in subsequent quarters,” he added.