Scotland’s IT and Technology companies face a higher risk of insolvency than any other industry according to the latest report from insolvency trade body R3. In December 2017, 40% of Scottish IT and Technology companies had a higher than average risk of insolvency, this was up 6% from 34.1% in January 2017.

The upward trend in insolvency risk was not isolated to the technology sector, with a rise across every sector from retail and manufacturing to construction and agriculture. The restaurant sector performed more strongly than any other, but it too saw risk rise from 22.5% to 24.3% during the course of 2017.

 Scottish Companies Fare Better than RUK

Whilst the report shows a high level of insolvency risk across the Scottish business landscape, Scottish companies did fair better in comparison with the rest of the UK, with a lower percentage of businesses rated with an above average risk of insolvency than anywhere else in the country.

Speaking about the figures, Tim Cooper, Chairman of R3 in Scotland, said: “It’s not been the easiest of years for the Scottish economy, which is reflected in the overall increases in proportions of companies at higher than usual risk of insolvency.

“However, R3 has recorded rises in every sector it monitors in every part of the UK, so Scotland is not an isolated case in having seen its risk profile trend upward. A few factors likely to have played a part in the rise in risk levels include a hike in the National Living Wage, higher inflation, exchange rate fluctuations, and costs associated with owning or leasing commercial property.

“There is also some uncertainty around what the final Brexit deal will look like, which could cause headaches for Scottish businesses trying to plan ahead. Businesses need to know what the framework for EU imports and exports will look like in the next few years. A lot of Scottish firms rely on EU staff, too.”