How have other industries fared in the past five years?
We recently covered the overall picture of Scottish corporate insolvencies for 2023 and the previous four years.
But in this blog we’re going to go a little deeper and look at what’s happened in all the individual industrial sectors in Scotland over that time period.
What areas have seen the most insolvencies? Which have been the most volatile over the past five years and which could be the most at risk this year?
The most frequent Scottish Corporate Insolvencies 2019 – 2023
| Sector | 2019 | 2020 | 2021 | 2022 | 2023 | Totals |
| Construction | 207 | 114 | 151 | 192 | 218 | 882 |
| Accommodation/Food | 215 | 122 | 90 | 184 | 259 | 870 |
| Retail | 118 | 72 | 61 | 142 | 172 | 565 |
| Professional Services | 85 | 55 | 100 | 120 | 97 | 457 |
| Administration | 91 | 71 | 66 | 95 | 103 | 426 |
| Manufacturing | 58 | 60 | 89 | 80 | 96 | 383 |
| Other Services | 48 | 33 | 42 | 71 | 68 | 262 |
| Information & Communication | 47 | 20 | 31 | 47 | 52 | 197 |
| Transportation | 33 | 19 | 29 | 28 | 33 | 142 |
| Real Estate | 33 | 16 | 18 | 22 | 36 | 125 |
| Totals (All) | 1,029 | 643 | 752 | 1,062 | 1,234 | 4,720 |
Figures from The Insolvency Service – the totals row refers to all corporate insolvencies for the year, not the ones displayed
The Scottish industries with the most insolvencies over the past five years are construction; hospitality (accommodation and food service) and retail.
It’s interesting to note that last year and 2019 saw hospitality as the single most vulnerable sector, with government support during the Covid-19 affected years of 2020 and 2021 being pivotal in helping to support businesses in this sector.
There has been a 40% increase in the number of hospitality businesses entering an insolvency procedure in 2023 than the previous year, the biggest annual rise of any sector. This is greater than the 21% seen in retail and the 13% in construction.
Professional services and businesses dealing with administration which includes travel agencies, employment services and building support services were the next highest – both registering more insolvencies than manufacturing.
Chris Horner, Insolvency Director with BusinessRescueExpert, said: “There is a frequent lag in the insolvency numbers even if economic conditions worsen and insolvencies increase because directors are doing everything in their power to keep their business alive and kicking.
“Scotland and the rest of the UK is in a recession and with growth forecast to be sluggish for the first half of the year at least, the impact on businesses might continue to be negative.
“Without a sharp uptick in activity, some companies might find themselves becoming too insolvent to be recovered so might end up in liquidation despite the intentions of its owners. Alternatively, a CVA or administration might be the best process for them to help buy them valuable time to recover and restructure.”
It’s hard to remember what happened last week or last month, never mind five years ago but what happened in Scotland was generally repeated all over the UK when it came to insolvencies.
2023 itself started sedately by recent standards with a dip in the monthly number of insolvencies as there tends to be after Hogmanay for various reasons.
By the time Burns Night arrived this year we found out that 2023 was actually the busiest 12 months for corporate insolvencies for 15 years so the first few weeks of a year aren’t the most accurate indicator of what the following months will hold.
This is why it’s important for directors to act while they have time on their side and one of the best uses is to take advantage of a free initial consultation with one of our advisors.
They will be able to work with business owners and directors to meet the challenges they face and make changes and decisions now that can pay off before we look back on 2024 – but only if they seize the initiative now and get in touch.