Scottish insolvencies rise amid spiralling costs and weaker demand
This represents a rise of almost 4 per cent on 2022-2023's figure of 1,132.
The increase has been put down to a greater willingess from creditors to pursue debts, with HMRC the largest and most common applicant to issue a winding-up order in an attempt to recover money for public purse.
Private sector creditors have also been following the trend in an effort to balance their own books.
Tim Cooper, President of insolvency and restructuring trade body R3 and Partner at Addleshaw Goddard LLP, said that firms were concentrating on staying afloat rather than aiming for growth.
He said: 'It may be that the prospect of having to navigate the rises in National Insurance and Minimum Wage, which came in at the start of this month, was too much for some directors and led to them closing their firms while they were still solvent and while the choice to do so was theirs.
'Economic growth remained sluggish and much of the momentum from earlier in the year gave way to flat conditions by the end of the Q4.
'Firms across a range of sectors have faced rising costs, weaker demand, and growing uncertainty about the broader economic outlook, all of which have made it increasingly difficult to plan and operate with confidence.'
Firms are targeting 'staying afloat' over growth (Image: Gareth Fuller/PA Wire) He added: 'Rises in Employers' National Insurance and the National Minimum Wage in the Autumn Budget caught many businesses off guard. These increases will particularly affect businesses with a high proportion of lower-paid or part-time roles, including those in retail, hospitality, and social care.
'As the changes take effect, the pressure on margins is being felt across the board, and business owners are facing difficult decisions about how to manage through an already tough environment.'
There were 7,412 personal insolvencies during the same time, a decrease of 8.3% from 2023-2024's figure of 8,082, and a decrease of 7.4% on 2022-2023's figure of 8,001.
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Mr Cooper said: '2024 was another difficult year for households across Scotland. The high and increasing costs of food, energy, and other bills continued to put a strain on personal finances, leading some to rely on food banks or dipping into savings just to cover basic expenses.
'Consumer confidence also took a hit, with people feeling increasingly worried about their financial future and cutting back on non-essential spending as a result.
'The cost of housing also remains a major concern. The end of the rent cap in March is expected to add further financial strain, particularly in urban areas where rents have already risen steeply. At the same time, high mortgage rates continue to affect homeowners. While recent interest rate cuts may provide some relief for new borrowers, those with existing loans remain under significant pressure.'
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