Twenty Scottish businesses are forecast to go bust each week this year, with 40 Scots being declared bankrupt each day as the nation continues to struggle under a mountain of historic debt.
Just under 15,000 Scots were sequestrated – the Scottish term for bankruptcy – or took out a protected trust deed (PTD) last year and a similar figure will go bust by the end of this year, BDO warned. Bryan Jackson, a partner at accountancy firm BDO, which made the predictions said that “rising utility bills, higher food costs and frozen wages” meant that people struggling with debts were also only able to pay off the interest rather than the amount they borrowed. Such individuals could be “tipped over the edge” by increases in their living costs or reductions in eg, overtime payments, he added, or by changes in personal circumstances such as divorce or unemployment. Jackson added: “Although the number of Scots being made bankrupt has reduced in the past few years from a peak of 23,500 in 2009, it has settled at a disturbingly high level. Prior to 2008, a figure of 15,000 Scots a year being bankrupted would have seemed outrageous but we have got used to a very high level of personal insolvency since the recession began and seem to accept these numbers as the inevitable consequence of the economic downturn. They may use payday loans to cover themselves in the short term but the debts will simply accumulate and eventually they will be made bankrupt.”
Many companies are only managing to service the interest on their debts rather than paying off the money they owe. This leaves firms in a precarious situation if interest rates begin to rise, as they will be unable to meet their repayments. Jackson said: “Worryingly, many businesses are simply paying interest on debts that are never reduced. A rise in interest rates, reduced income, or a change in the marketplace and these businesses will collapse.”
Just under 15,000 Scots were sequestrated – the Scottish term for bankruptcy – or took out a protected trust deed (PTD) last year and a similar figure will go bust by the end of this year, BDO warned. Bryan Jackson, a partner at accountancy firm BDO, which made the predictions said that “rising utility bills, higher food costs and frozen wages” meant that people struggling with debts were also only able to pay off the interest rather than the amount they borrowed. Such individuals could be “tipped over the edge” by increases in their living costs or reductions in eg, overtime payments, he added, or by changes in personal circumstances such as divorce or unemployment. Jackson added: “Although the number of Scots being made bankrupt has reduced in the past few years from a peak of 23,500 in 2009, it has settled at a disturbingly high level. Prior to 2008, a figure of 15,000 Scots a year being bankrupted would have seemed outrageous but we have got used to a very high level of personal insolvency since the recession began and seem to accept these numbers as the inevitable consequence of the economic downturn. They may use payday loans to cover themselves in the short term but the debts will simply accumulate and eventually they will be made bankrupt.”
Many companies are only managing to service the interest on their debts rather than paying off the money they owe. This leaves firms in a precarious situation if interest rates begin to rise, as they will be unable to meet their repayments. Jackson said: “Worryingly, many businesses are simply paying interest on debts that are never reduced. A rise in interest rates, reduced income, or a change in the marketplace and these businesses will collapse.”
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