Scottish business failures rise 7% in 2016
The number of businesses in Scotland entering insolvency increased in 2016, according to a report by KPMG, with the greatest impact felt among smaller businesses. David Menzies explains.
The number of businesses failing in Scotland rose by 7% in 2016 compared to 2015, according to new statistics from KPMG and reported by Scottish Financial News.
Administrations, which typically affect larger organisations, decreased by 3% (99 down from 102) year-on-year while liquidations, which tend to affect smaller businesses, rose by 8% in 2016 compared to 2015 (870 up from 802).
Blair Nimmo CA, head of restructuring for KPMG in the UK, said: “2016 saw a seven percent increase in the number of corporate insolvencies which, in general, is a negative sign for businesses and the Scottish economy. That being said, the fourth quarter of the year showed a significant reduction from that recorded during the same period the previous year.”
Overall, the number of insolvencies levelled out in 2015, and was still well below that experienced in 2010-2012.
2016 predictions way off mark
On a positive note, the predicted increase in oil and gas related insolvencies, due to the low oil price, did not come to pass. Nor did the gloomy outlook caused by the impact of Brexit or Donald Trump’s presidency materialise.
The report warns, however, that the reduction in the value of the Pound against the Euro and the US Dollar will affect businesses that purchase raw materials, goods or services in these currencies for sale in the UK, and it may prove difficult to pass on price increases.’
“For the most part, economic predictions during 2016 were way off the mark. While there are many positive signs for 2017 including GDP growth, low unemployment and interest rates, we sense a degree of uncertainty. On Brexit, we sense businesses will continue to adopt a cautious approach until matters become clearer after the triggering of Article 50 in March,” Blair stated.
The figures laid bare
12 months to 31st December 2016
|Liquidation Appts||Admin & Rec Appts||Total Corporate|
|Quarter||Liquidation Appts||Admin & Rec Appts||Total Corporate|