Back to listing


Scottish Insolvency Statistics (Apr-Jun 2018): Comment from R3

Commenting on the Accountant in Bankruptcy’s corporate and personal insolvency statistics for the period April to June 2018 (Q1 2018-­19), Tim Cooper, Chair of R3 in Scotland, the insolvency and restructuring trade body says:

Personal insolvencies:

  • The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland rose by 27% in Q1 2018-19 (April-June 2018) compared with Q4 2017-18 (January-March 2018), and rose by 12% compared with Q1 2017-18 (April-June 2017).

“Scottish personal insolvency numbers have been fairly unpredictable from quarter to quarter – this is the fourth time in a row that a quarter-on-quarter rise has followed a quarter-on-quarter fall. The underlying trend line for the past two years, however, shows a rise in the number of personal insolvencies, and this latest set of figures continues this pattern.

“During the second quarter, there were rises in the cost of petrol and diesel, which will have eaten away at people’s budgets. Inflation across the UK was lower than at the start of the year, but consumers are still adjusting to the price rises experienced over the latter half of 2017.

“The impact of the new, higher rates of the National Minimum and Living Wages introduced in April will have helped many people to bear higher costs for essentials like food and fuel, although these latest personal insolvency numbers suggest that for many, it may not have been enough, especially following a long period when wage growth was outstripped by inflation.

“This increase in personal insolvency comes during a period of low unemployment in Scotland. The latest figures show a small rise in the number of people seeking work in Scotland, driven by more women looking for jobs. Overall, the headline unemployment rate of 4.3% is roughly in line with the 4.2% seen across the UK as a whole.

“R3’s most recent personal debt research suggests that a third of Scottish adults (33%) often or sometimes struggle to payday, so money worries are not confined to a small number of people. As always, talking through any worries with a qualified and trustworthy advisor can be a real relief – we want to get the message across that help is out there, and taking that first step to speak to someone can be scary but is ultimately a good idea.”

Corporate insolvencies:

  • The number of corporate insolvencies in Scotland fell by 5% in Q1 2018-19 (April-June 2018) compared with Q4 2017-18 (January-March 2018), but rose by 23% compared with Q1 2017-18 (April-June 2017).

“The number of corporate insolvencies has fallen slightly in April-June 2018 compared with the previous quarter, but is notably larger than in the same quarter last year. The larger number of corporate insolvencies in January-March 2018 may have been boosted by directors deciding to wind up their businesses at the end of the financial year, while the bigger picture shows that corporate insolvencies have been trending upwards since the start of 2017.

“It’s been a tough first half for many Scottish companies, with only weak GDP growth of 0.2% in the first quarter, and a big fall of construction sector output (-3.5%). The statistics do not quite tell the whole story, however, as company voluntary arrangements and company administrations are not included.

“Every insolvency of a company will have a knock-on effect for other companies which were its suppliers, customers or creditors. Around 17% of companies in Scotland may have suffered a financial hit following the insolvency of a customer, supplier or debtor in the last six months, according to R3’s research – this is however lower than the proportion of UK companies reporting a negative effect from the insolvency of a counterparty within the previous six months, which stands at over one in four (26%).

“The picture isn’t all rosy for Scotland, though. The troubles in the retail sector in particular have been widely reported, with consequences for companies in other sectors, from shop outfitters to recruitment agencies supplying shopfloor staff. The Scottish Government launched a review of business rates in late June; based on its findings, there may be some relief for beleaguered high street names, which can’t come soon enough.

“Businesses as a whole are affected by a lack of consumer spending power, as inflation has eroded people’s take-home wages, leaving less for essentials and for extras. In addition, the background of rising staff costs, pensions auto-enrolment costs and the need to invest in technology and more efficient processes has not gone away.

“R3’s monthly research into levels of company distress consistently finds Scotland with the lowest proportion of companies considered at greater than normal risk of insolvency in the next twelve months of anywhere in the UK. However, the proportion of businesses falling into the negative band has risen from a fifth (22%) in July 2017 to over a third (35%) in July 2018, mirroring the trend for the UK overall (from 27% to 42% over the same period).

“It’s really important to emphasise that a period of distress will not inevitably lead to insolvency: for directors of struggling firms, seeking external guidance from a regulated, professional expert on restructuring and turnaround can be a pivotal experience. Don’t wait until it’s too late – getting advice and taking action before your business is overtaken by events is key.”

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.