Blair Nimmo

Fewer Scottish businesses failing in 2017

New analysis from professional services firm KPMG indicates positive signs for the Scottish economy, with a significant drop in the number of Scottish companies failing in the first three months of 2017.

In the first quarter of this year, the total number of business insolvency appointments decreased by 19% (170 down from 211) compared to the same three months in 2016 (Jan to March). This decrease is reflected in both liquidation appointments (down 20%), which tend to affect smaller businesses, and administrations (down 14%), which usually involve larger organisations.

Blair Nimmo, head of restructuring for KPMG in the UK, said:

“While insolvencies are inevitable in a corporate environment, the latest statistics present a good picture for Scotland, and we have returned to what we would call “normal” or “business as usual” levels.

“We have seen some stability return to the oil and gas sector, and while there remains some critical issues, at no point over the past three years have we experienced the level of sector-related insolvencies which might have been expected, given the drastic reduction in the oil price. The general consensus is that the oil price has broadly bottomed out, subject to an unforeseen event.  That being said, we are working with a number of oil and gas firms, albeit in a more stable environment, in areas such as working capital management, where often we are finding significant scope for improvement at very little cost to the business.

“Beyond that, we are seeing little sector impact across Scotland or indeed any Brexit-related impact.  In the context of higher input prices due to adverse exchange rate movements, it is of course possible that this could be partly due to hedging.

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“It is also interesting to note the latest figures tie in with the findings from the Federation of Small Businesses, which indicated business confidence in Scotland increased during the first quarter, albeit from a low base.  Similarly, the British Chamber of Commerce has reported its members had a good start in the first three months of this year.

“While some short-term uncertainty following the news of the general election in June is expected, we do not predict this will manifest in any significant change in insolvency numbers in the short or longer term.”