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R3 in Scotland responds to the Q2 2024 insolvency statistics

R3 in Scotland responds to the Q2 2024 insolvency statistics

23 October 2024

  • Corporate insolvency numbers (liquidations and receiverships) in Scotland for Q2 2024-2025 increased by 10.6% compared with Q2 2023-2024, to a total of 313.
  • The number of corporate insolvencies (liquidations and receiverships) in Scotland for Q2 2024-2025 increased by 10.6% compared with the previous quarter’s total of 283 (April-June 2024).
  • Personal insolvency numbers (bankruptcies and protected trust deeds) in Scotland for Q2 2024-2025 decreased by 9.1% compared with Q2 2023-2024, to a total of 1,891.
  • The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland for Q2 2024-2025 decreased by 8.3% compared to the previous quarter’s total of 2,063 (April-June 2024).

Commenting on the Scottish insolvency statistics, Q2 2024-2025 (1 July 2024 to 30 September 2024) Iain Fraser, Chair of the Scottish Technical Committee at R3, the UK’s insolvency and restructuring trade body, and a Partner at FRP Advisory, said:

"Despite the increase in corporate insolvencies, Scotland’s economy has shown some resilience of late – with the most recent figures showing a GDP growth of 0.3% in July 2024. This growth has mainly been driven by the manufacturing sector and information and communication services, along with a boost in consumer spending from major summer events such as the Euros and the Fringe Festival.

"Inflation has dropped considerably to 1.7%, and this feels a world away from the eye-wateringly high figures we were grappling with one and two years ago. This is a clear indication of just how far we have come in stabilising the economy after a challenging few years. However, there is still some way to go, as many businesses continue to feel the lingering effects of high costs.

"With unemployment in Scotland falling below the UK average, interest rates falling and inflation easing, there are reasons to be optimistic. However, there is an air of uncertainty for businesses as the Autumn Budget approaches at the end of this month. Directors and business owners will likely be looking to the upcoming Budget and to the Scottish Government for clarity before they make any big decisions about the future of their businesses.

“Whilst Scotland’s economy has shown resilience, it would seem Scotland’s economic upturn has come too late for a number of businesses as the increase in Creditors’ Voluntary Liquidations has driven corporate insolvency levels in Scotland to their highest levels since Q4 22-23. After years of battling high costs and cautious consumer spending, an increasing number of directors are turning to an insolvency process to help resolve their financial issues.

“From a solvent perspective, Members’ Voluntary Liquidations (MVLs) have also increased to their highest figure since Q1 23-24, and this suggests there has been a rise in the number of solvent businesses shutting. This is perhaps due to director fatigue after four years of economic turbulence and the effect this has on the business climate, or directors taking action to reorganise their businesses ahead any potential tax changes in the Budget later this month.

“Looking at the personal insolvency numbers, both the quarterly and yearly fall has been driven by a reduction in bankruptcies and Protected Trust Deeds. Bankruptcy numbers have dropped to their lowest level since Q4 2021-2022, which suggests that more individuals may be seeking earlier intervention for lower levels of debt.

"While personal insolvency numbers have decreased this quarter, we are not seeing a sustained or consistent decline. Looking at the wider trend over recent quarters, insolvency numbers have fluctuated, with totals reaching 2,101 in Q1 2023-2024 and falling to 1,886 by Q4 of the same year, only to rise again in the following quarter. This suggests that despite the recent drop, there are reasons to remain cautious as economic pressures and financial challenges continue to affect individuals across Scotland.

“We’ve been reading about inflation for a long time, but now people across Scotland are really starting to feel the impact. While wages initially rose to keep pace, the rising cost of everyday essentials and bills is now outpacing income growth. Many people have already cut out spending on things like holidays, meals out, and other small luxuries like subscriptions, but for some, these adjustments still aren’t enough to manage their finances.

"The recent rise in energy prices will also likely be a concern for some individuals across Scotland as we head into the colder months. With heating becoming a necessity, higher energy bills could stretch already tight budgets even further, leaving some households struggling to cover their expenses, and potentially relying on forms of credit to get by.

"My message to anyone worried about their finances, whether a business owner or an individual, is to seek advice as soon as you spot the early signs of financial distress. If you're struggling to pay your bills on time or feeling anxious about money, that’s a strong indication that it's time to ask for help.

“Having the conversation early not only gives you more time to consider your options, but also brings peace of mind, knowing that you're taking steps to address your concerns."

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Amelia Franklin
Amelia Franklin
0207 566 4203
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