SCOTTISH businesses are, on average, faring worse than their peers in most other parts of the UK in terms of falling profits and sales, according to the latest quarterly survey from insolvency professionals' trade body R3.

The survey found 8% of businesses in Scotland were able to pay the interest on their debts but not reduce the debt itself.

R3 said this equated to about 14,000 "zombie businesses".

The 8% figure was the same in Scotland as in the UK as a whole, in which R3 calculated there were 146,000 "zombie" firms.

John Hall, Scottish R3 council member, said: "Our survey indicates that enormous numbers of Scottish businesses are simply treading water financially, hoping for an upturn in the market to rescue them. Unfortunately, the indications are this will not happen for some and that they may face closure in the months and years to come."

In the survey, which covers the three months to July, 44% of Scottish and Northern Irish businesses reported a decrease in profits and 40% stated they had encountered reduced sales.

While R3 does not split out the Scottish and Northern Irish findings for the profit and sales questions, a spokesman said they were similar. The survey includes far more Scottish than Northern Irish businesses.

Looking at the UK as a whole, R3 found 34% of firms suffering a decrease in profits and 31% experiencing falling sales.

But Scottish firms fared better in terms of market share. While 17% of Scottish and Northern Irish firms reported a fall in market share, this was below a corresponding UK-wide figure of 22%.

Meanwhile, about 8% of Scottish businesses reported they were struggling to pay their debts when they fell due, and 5% said they were having to negotiate payment terms with their creditors.

R3 noted the UK retail sector had the highest proportion of businesses which would be unable to pay their debts in the event of a rise in interest rates – at 18%. The survey found that 16% of UK construction businesses could only pay interest.

The relatively poor showing of Scotland and Northern Ireland in the R3 business distress index survey contrasts with research published earlier this week by banking group Santander on companies' future growth expectations.

According to Santander's survey, Scottish companies were on average more upbeat about their growth prospects over the next five years than those anywhere in the UK outside London and the south-east of England. This survey found the average Scottish business is projecting growth in turnover of 91% over the next five years.