SCOTLAND’s businesses are in a markedly stronger position this year than they were last, according to a new report.

Leading professional services group KPMG said the number of companies failing in Scotland had dropped significantly in the second quarter of 2017, compared to the same three months last year.

Its figures for the three months to the end of June reveal that the total number of insolvency appointments dropped by 27 per cent to 196 (down from 270) compared to the same period in 2016.

There was a 31 per cent decrease in liquidation appointments to 170 (down from 246), which tend to affect smaller businesses, but an eight per cent increase in administration appointments to 26 (up from 24), which usually involve larger businesses.

A comparison between the 12 months to June 2017 and the same period to June last year showed a seven per cent fall in the number of insolvency appointments to 867 (previously 935).

Liquidation appointments registered a fall of seven per cent to 772 (down from 834), which tend to affect smaller businesses, and a six per cent fall in administration appointments to 95 (down from 101), which usually involve larger businesses.

Blair Nimmo, head of restructuring for KPMG in the UK, said: “Marking an encouraging sign for business in Scotland, there has been a significant fall in corporate insolvencies during the last quarter, and in the last year.

“The statistics reflect our experience on the ground.

“Oil and gas has come through a very difficult period and in order to survive many businesses in the sector have drastically changed their operating models and cut costs significantly.

“This has put them in a stronger position and, along with the support of their stakeholders, they continue to navigate through what is still a challenging period.

“As a result, we are seeing few insolvencies in this sector, with most of our work revolving around improving approaches to working capital management.

“Otherwise, it is difficult to detect any sectoral pattern in Scotland and, overall, we sense a very cautious approach from most corporates, given the current political and economic climate.”

However, Nimmo added a caution for the future - that there were still clouds on the horizon.

“The likely impact of Brexit is yet to be seen and the recent election has undoubtedly introduced greater uncertainty and may have had a negative effect on consumer and corporate confidence,” he said.

“Inflation is on the increase and interest rates may be about to rise, while adverse exchange rate movements could also be starting to impact on some sectors, with businesses expressing concern over their ability to pass on additional costs to their customers.

“This sentiment is reflected in our most recent CEO survey which revealed the majority of UK business leaders are subdued about growth prospects over the next three years.”

Nimmo added: “Half of those surveyed believed their businesses would grow by less than two per cent each year and three quarters warned increases in inflation meant they would have to pass on increased costs to their customers.

“The next 12 months and beyond will be challenging for many businesses and it will be interesting to see how Scotland fairs relative to the rest of the UK.”