Corporate and personal insolvencies in Scotland rose to a seven-year high last year amid Brexit uncertainty, according to figures from government agency Accountant in Bankruptcy (AIB).
Analysis by insolvency professionals organisation R3 found there were 980 corporate insolvencies in 2019, 4% higher than in 2018. There were 13,589 personal insolvencies, 13% higher than the previous year and at their highest level since 2013.
Looking at quarterly figures, the number of corporate insolvencies in Scotland fell by 4% in October to December last year compared with July to September but rose by 8% compared with October to December in 2018.
Personal insolvencies fell by 5% in October to December last year compared with July to September 2019 but rose by 3% year-on-year.
Tim Cooper, chairman of insolvency and restructuring body R3 in Scotland, said: “The higher level of corporate insolvencies in Scotland in 2019 compared with previous years is a worrying sign that conditions may be harshening for Scottish enterprises.
“The figures released today do not include administrations or company voluntary arrangements either, meaning the true extent of Scottish business difficulties could be even higher. If one word could be said to sum up 2019, there’s an argument to be made for it to be ‘uncertainty’.
“Brexit uncertainty led to many companies understandably taking a ‘wait and see’ approach on everything from new equipment to decisions about opening offices. This in turn added sand to the wheels of deal-making and business investment, with knock-on effects for the economy as a whole.”
He added: “Companies also had to cope with stop-start stockpiling over the course of 2019 as they prepared for the putative Brexit dates in March and then October. Increased levels of business activity before these dates were offset by slacker demand after them, as companies used up their stockpiles rather than ordering new inputs or products.”
On personal insolvencies, he urged people to seek advice early if their finances are precarious.
He said: “Scots have a reputation for stoicism, which is helpful in many circumstances but dealing with financial problems is not one of them. Instead, reaching out at the earliest possible opportunity should be encouraged so that reliable and helpful advice from a reputable, qualified source can be sought.
“Many people are just one missed pay cheque away from a financial downward spiral – for example, a bout of illness for someone on a zero hours contract can be enough to destabilise a precarious budget.”
