‘Corporate insolvency rates are now at the highest levels since 2013. The number of Scottish businesses entering into insolvency proceedings increased in the first quarter of 2016-17 by 12.2 per cent against the fourth quarter of 2015-16.
‘We have already seen several well-known brand names file for administration this year, endangering hundreds of Scottish jobs. Since the Brexit vote, the CBI quarterly industry survey showed that business optimism has fallen at the fastest pace since the 2009 recession. If this fall in optimism translates into a decline in investment, from both local companies and international inward investment, there could be many more businesses struggling to secure the funding they require for growth and to meet current demands.
‘Solvent liquidations remained high - 25 per cent higher than the first quarter of Q1. This could reflect business owners seeking to exit from long standing successful businesses at a time when they have sufficient equity rather than continuing to trade in an uncertain market.
‘The total number of personal insolvencies remained below 2,500 for the fifth straight quarter, signalling what appears to be a welcome new trend of low and stable personal insolvency rates. Furthermore, the number of debt payment programmes approved this quarter has remained broadly in line with the previous four months, while the number of completed debt payment programme has jumped by 21.3 per cent.
‘The past year of relatively positive personal insolvency rates has come following the first full year for the Bankruptcy and Debt Advice (Scotland) Act implemented on 1 April 2015. The legislation aimed to be “one of the most modern systems of debt advice and debt management in the world” and the first 12 months demonstrates a real success for AIB and the Scottish Government.
‘While the new regulations have so far achieved rates of admission that some could argue as finally reaching ‘remission’ from those seen in the financial crisis, that’s not to say that a new outbreak could still sweep the country.
‘Earlier this week, the Registrars of Scotland warned of falling Scottish housing prices, down by 2.3 per cent in the first quarter of 2016-17 compared to the same period in 2015-16. Substantial falls were recorded in Aberdeenshire (-10.8 per cent) and Aberdeen City (-6.1 per cent) following the economic turmoil caused by the oil price collapse. Homeowners and those with buy-to-let investments with relatively large mortgages should beware of the impact of falling equity.’