Scottish business failures rise 7% in 2016

david-menzies By David Menzies, ICAS Director of Insolvency

17 January 2017

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 ApptsAdmin & Rec ApptsTotal Corporate
Insolvency Appts
2010 935 174 1109
2011 1099 188 1287
2012 1028 139 1167
2013 747 125 872
2014 876 67 943
2015 802 102 904
2016 870 99 969

Quarterly comparison

QuarterLiquidation ApptsAdmin & Rec ApptsTotal Corporate
Insolvency Appts
Q1 2014 220 19 239
Q2 2014 225 15 240
Q3 2014 239 15 254
Q4 2014 192 18 210
Q1 2015 168 20 188
Q2 2015 194 20 214
Q3 2015 158 19 177
Q4 2015 239 36 275
Q1 2016 189 22 211
Q2 2016 246 24 270
Q3 2016 255 27 282
Q4 2016 180 26 206

Topics

  • Insolvency

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