Scottish businesses are seeing a starker increase in 'advanced distress' than the rest of the UK during the second quarter of 2022.
This is according to recovery firm Begbies Traynor’s latest Red Flag Alert data, which shows that companies with financial problems such as decrees of more than £5,000 filed against them rose by 132% compared with the the second quarter last year, while the UK as a whole saw an increase of 37%.
It also revealed a 71% increase in this type of advanced distress in the country quarter-on-quarter, contrasted with a rise of 3% across the UK as a whole.
In terms of ‘significant’ or early-stage distress - which refers to businesses that have had decrees of less than £5,000 filed against them - Scotland saw a similar picture to that across the UK.
In the three months from April to June, the country saw this type of distress fall by 13%, compared with the same period the previous year, while the national figure was -11%.
However, Scottish businesses performed more strongly quarter-on-quarter, seeing a 1% fall in ‘significant’ distress, while the rest of the UK saw no change.
In the second three months of 2022, more than 29,000 businesses in Scotland saw instances of early stage distress and this affected almost 582,500 businesses across the UK.
Looking at how the Scottish business sectors have been impacted by early-stage distress in the last quarter year-on-year, those that performed most poorly were food and drug retailers (up by 6%), printing and packaging (rising 5%) and food and beverages and industrial (both up by 2%).
In contrast, sectors which saw falls in ‘significant’ distress since the previous quarter were financial services (down by 6%), bars and restaurants, utilities and health and education (all down by 4%), and construction, hotels and accommodation, and telecommunications (down by 2%).
Ken Pattullo, managing partner for Begbies Traynor in Scotland, said: “While levels of early-stage distress here are closer to those across the UK and have seen a slight fall, many economists fear that the worst is yet to come.
“Unfortunately, the UK economy is continuing to be impacted by uncertainty over Brexit, together with ever-rising energy costs as well as supply chain issues as China undergoes further Covid lockdowns.
“We are warning Scottish businesses to prepare for a rocky road ahead.”
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