A RECORD number of Scottish companies went bust in the first quarter, and manufacturers north of the Border have suffered a renewed slide in output, it has emerged.
A survey from the Confederation of British Industry revealed Scottish manufacturers' output volumes fell in the latest three months, following two consecutive quarters of slight growth, and that firms anticipate a further drop amid continuing weakness in domestic orders.
However, David Lonsdale, assistant director of CBI Scotland, chose to focus on more encouraging findings from the latest quarterly industrial trends survey, including solid growth in export orders and an associated jump in optimism.
The pace of decline of Scottish manufacturers' orders from within the UK eased in the latest three months, the survey showed, but it remained steep. This would appear to underline continuing weakness in the UK economy.
Data from the Office for National Statistics revealed yesterday that the UK had suffered the dreaded "double-dip" back into recession, suffering a second consecutive quarter of contraction with a 0.2% fall in gross domestic product in the opening three months of this year. UK GDP had dropped by 0.3% in the final three months of 2011.
Meanwhile, an analysis of the latest figures from the Accountant in Bankruptcy by accountancy firm PKF revealed that the number of Scottish corporate failures in the opening three months of this year was the highest for any quarter since comparable records began in 2002. PKF's analysis showed 385 Scottish companies went bust in the first three months of 2012, up 37.5% on the figure of 280 for the final quarter of last year and 31% higher than the number of 294 for the period from January to March 2011.
Bryan Jackson, corporate recovery partner at PKF, said: "These figures show the real state of the Scottish economy. Many companies are simply having to close down as they cannot see an end to the economic gloom."
He added: "There will undoubtedly be businesses which have used up years of cash reserves to stay afloat but have now found they are unable to carry on due to the relentless lack of an upturn in the economy. The news that the UK economy has fallen into a double-dip recession is unlikely to surprise any of the business owners who have gone bust in the first three months of this year. Indeed, many of them may have wondered whether we were ever really out of the recession."
PKF noted that there had been a record 1278 corporate failures in Scotland in 2011, up from 1098 in 2010. The previous quarterly record was in the three months to September last year, when 361 companies went bust.
Mr Jackson said of the jump in Scottish corporate insolvencies in the first quarter: "What this means is that the Scottish economy has some considerable way to go before we start to see a glimmer of hope on the horizon. Last year's record number of corporate failures unfortunately looks like being beaten by this year's figures."
CBI Scotland's latest industrial trends survey was conducted between March 21 and April 11. Subtracting the percentage of manufacturers reporting a rise from that suffering a decline, a net 5% posted a fall in output in the latest three months. And a net 10% forecast a decline in output in the next three months.
Meanwhile, a net 14% reported a fall in domestic orders in the latest three months. However, a net 35% enjoyed a rise in export orders. And a net 36% reported a rise in employment, after two consecutive quarters of job-shedding.
A net 8% of Scottish manufacturers reported a rise in optimism about the "business situation".
Mr Lonsdale said: "This is a more heartening set of results than those from the previous, admittedly dismal quarter, with a wider spread of indicators beginning to point in a more positive direction. The stronger performance in export orders is particularly encouraging, and suggests firms are doing better in both mature and new overseas markets."
The breakdown of the UK GDP figures reveals the dominant services sector grew by 0.1% in the first quarter, while manufacturing output dipped by 0.1%. Construction output dropped by 3%.
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