‘Scottish legal and finance firms displaying high levels of insolvency risk’

The research shows that 30.7 per cent of businesses in the sector are considered to be at higher than normal risk of entering insolvency in the next year, down 2.1 per cent from last month.

This sector is displaying similar levels across the UK (32.6 per cent), while London has the highest proportion at heightened risk (36.1 per cent).

R3, whose survey is based on data from more than 2,000 Scottish firms, found the number of professional firms at a heightened risk of insolvency in Scotland was broadly similar to the UK as a whole (32.6 per cent). But it was less than in London, where 36.1 per cent of professional services firms were said to be at a heightened risk of insolvency. London and Scotland both voted decisively to remain in the EU in the June referendum.

Tim Cooper, chair of R3 in Scotland and a partner at HBJ Gateley in Edinburgh (pictured), said: “The professional services sector was among those most vocally concerned about the prospect of the UK exiting the EU so it’s perhaps unsurprising to see that there are relatively high rates of businesses displaying instability. The slight fall in the proportion of those at risk this month however is to be welcomed, and we’d like to see this continue.

“There are fears about the overall economic impact of the Brexit vote which could be leading to a slowdown in the flow of work for professional services. This combined with existing sluggish growth in Scotland could be a “double whammy” for the industry.

“That said, it’s important to remember that nothing has yet changed in the UK’s relationship with the EU, and we don’t know what form a future agreement will look like nor what it will mean for Scotland. In the meantime, it’s important that businesses start to plan how they will manage the risks that different ‘Brexit’ scenarios could represent.

“Any business with financial concerns as a result of Brexit should seek professional advice at the earliest opportunity to prevent unnecessary difficulties down the line.”

The figures are from R3’s latest insolvency risk tracker. The tracker is compiled using Bureau van Dijk’s ‘Fame’ database and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.