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Critical distress up more sharply in Scotland



The firm’s latest red flag alert report, published yesterday, shows there was a 22.6% increase in “critical” or more advanced distress among Scottish businesses in the first quarter compared with the same period last year.

This type of severe distress affected more than 2,060 businesses in Scotland, Begbies Traynor noted.

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It observed that there was a 20.1% year-on-year rise in critical distress among businesses in the UK as a whole in the first quarter, with more than 40,170 businesses affected.

Comparing the first quarter with the final three months of last year, critical distress among Scottish businesses was down 8%. This was a less-sharp fall than a corresponding decline of 15.4% in the UK as a whole.

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Begbies Traynor said: “Of the 22 sectors analysed in Scotland, 13 saw rises in critical distress in the first quarter of the year compared with the first three months of 2023. The most badly affected were print and packaging, with a 166.7% rise; followed by food and drugs retailers, up by 102.7%; travel and tourism, up by 83.3%; and food and beverages, up by 77.8%. Property and real estate, and construction also saw marked year-on-year increases, with rises of 60.2% and 30% respectively; while professional services rose by 23.3%.”

It added: “The Scottish sectors which performed most strongly in Q1 2024 compared with Q1 2023 with falls in advanced distress were utilities, down by 83.3%; industrial transport and logistics, down by 31.8%; and wholesale, down by 25%.”

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Ken Pattullo, managing partner of Begbies Traynor in Scotland, said: “It is no surprise that businesses in Scotland and across the UK are continuing to struggle in the face of such a tough economic climate. Unfortunately, inflation is slowing less than expected and, with ongoing global unrest, the picture is far from certain.

“In Scotland, it’s evident that both business-to-business and consumer-facing sectors are suffering as many people continue to struggle from the pressure of rising prices and are yet to feel that the UK economy is on the road to recovery.”

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