Scottish business failures continue to fall in 2017

New statistics from KPMG show the number of businesses failing in Scotland fell in the third quarter of 2017, compared to the same three months in 2016. This decrease marks the third consecutive quarter of improvement in insolvencies compared to the same respective months last year.

Figures for the three months to 30 September 2017 reveal the total number of insolvency appointments decreased by 23 per cent (217 down from 282) compared to the same period in 2016.

There was a 24 per cent decrease in liquidation appointments (193 down from 255), which tend to affect smaller businesses, and an 11 per cent decrease in administration appointments (24 down from 27), which usually involve larger businesses.

A comparison between the 12 months to September 2017 and the same period to September 2016 shows a 23 per cent fall in the number of insolvency appointments (802 down from 1040). There was also a 24 per cent decrease in liquidation appointments (710 down from 931), and a 16 per cent fall in administration appointments (92 down from 109).

Blair Nimmo, head of restructuring for KPMG in the UK, said: “Scotland’s corporate insolvencies continue to show encouraging signs when compared to the same period last year, with a marked fall in failing businesses both during the last quarter and in the last twelve months.

“The data reflects what we are seeing on the ground, with decreases in the number of liquidation, administration and receivership appointments across most if not all sectors, compared with last year.

“Following a challenging time for the oil and gas sector, it appears the ship has been steadied. The adoption of new business models and significant cost-cutting measures have left the energy industry in a more comfortable position, and as a result, we have seen fewer insolvencies in that sector. Elsewhere, it is difficult to detect any obvious sector weaknesses, with most companies understandably adopting a cautious approach to business, given the broader political and economic climate.

“The impact of Brexit remains on the horizon, with no obvious influence yet being felt. Looking ahead however, uncertainty in a broader sense may leave a negative impression on consumer and corporate confidence. The weak exchange rate may take its toll on certain sectors, and inflation is at its highest level in five years.

“In all three quarters of this year, insolvency figures have improved compared with 2016. What will be key to the success of many Scottish firms, however, is how they cope with the coming 12 months and beyond.”