Levels of businesses in Scotland that are already experiencing ‘critical’ or advanced distress have seen a massive increase in the final quarter of 2022 compared with the same period the previous year, according to new research from business rescue and recovery specialist Begbies Traynor.

The latest Red Flag Alert data, for Q4 of 2022, shows that there was a 161% year-on-year increase in the number of businesses in Scotland experiencing ‘critical’ distress (which refers to companies that have financial problems such as decrees of more than £5,000 filed against them).

The rest of the UK saw a less dramatic increase of 36% in Q4 2022 compared with Q4 2021.

Scotland also saw higher levels of ‘critical’ distress in the last quarter of 2022 compared with the previous quarter, with a rise of 35%. Across the UK as a whole, this type of advanced distress rose by 10% quarter-on-quarter.

In terms of early or ‘significant’ distress (which includes companies having had decrees of less than £5,000 filed against them), Begbies Traynor’s research showed a slightly more optimistic picture with the combination of buoyant pre-Christmas shopping, the World Cup, and government support for energy costs helping to boost retail sales and the wider economy.

In Scotland, early-stage distress remained stable compared with the same period the previous year, affecting over 29,800 businesses, while it fell by 1% compared with the previous quarter.

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