By Daniel Hunter
The number of Scottish firms failing in the first quarter of 2013 fell by 62.9% compared with the same quarter in 2012 and by 22.7% compared with the fourth quarter of 2012 according to analysis of the latest figures by leading accountancy and business advisory firm, BDO LLP.
The latest Accountant in Bankruptcy (AiB) figures show that 143 Scottish companies went bust in the first thirteen weeks of this year compared to 385 in the first quarter of 2012.
Although these figures appear to indicate a dramatic improvement in the performance of businesses in Scotland there are some anomalies within the figures. The figure for creditors voluntary liquidations and receiverships are broadly in line with previous quarters. The major fall is entirely down to compulsory liquidations which have reduced by 75.6% on the same quarter in 2012. The last quarter when compulsory liquidations was as low as this quarter was in Q4 2007 when the recession had not yet started.
“These figures would, on the surface, indicate an improvement in the performance of the Scottish business community. The dramatically reduced numbers appear to show a more benign economic environment. If that is the case then this is to be welcomed," Bryan Jackson, Business Restructuring partner, BDO LLP, commented.
"However, this may be more of a temporary blip than a full recovery. It is difficult to believe that businesses are operating in a more benign economic environment now than they were a year ago given the continued number of high profile failures.
“The reduced failure rate could be due to more realistic expectations and planning by business owners. As the recession has lasted so much longer than anyone expected we may be in a period when most Scots business owners are operating more effectively in relation to the current market conditions.
“It should be stated, however, that there remain structural difficulties within certain business sectors including retail, hospitality, and construction which are causing considerable difficulties among many Scottish businesses. Even today there was the announcement of the closure of 26 shops within the 146 year old Dundee-based shoe group which trades as DE shoes and foot factory.
“I would hope that these figures indicate a major shift for Scottish business but fear that they may be more to do with a temporary improvement rather than any major change in the economy.”
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