AROUND one in four firms in Scotland are at serious risk of going bust within the next year amid signs trading conditions have deteriorated but the situation is worse in the rest of the UK, research suggests.

Restructuring specialists at the R3 trade body found 23.1 per cent of firms in Scotland are at higher than normal risk of insolvency, compared with 19.6 per cent in January.

The percentage of UK firms in the high risk group has risen to 29 per cent from 24.7 per cent.

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R3 noted official figures showed Scotland’s economy grew faster than the UK average in the first quarter.

While the research covers a period during which consumer spending has come under pressure, the results of the R3 study suggest it is holding up better in Scotland than elsewhere.

Twenty four per cent of retailers in Scotland are at higher than normal risk, versus 25.9 per cent in the UK. Some 24.1 per cent of Scots transport and haulage firms are higher risk against 34 per cent in the UK. Hauliers do lots of work for retailers.

Tim Cooper, R3’s chair in Scotland and a partner at Addleshaw Goddard law firm, said Scotland benefited from its strengths in areas such as food and drink and tourism. The oil and gas sector has stayed remarkably resilient, despite the crude price plunge since 2014.

As political and economic uncertainty has been accompanied by an increase in the percentage of firms at risk in Scotland this year, Mr Cooper said businesses must not be complacent.

He added that much of the spending in retailers is funded through debt, which cannot continue to grow indefinitely.

In July a study by KPMG found Scottish corporate insolvencies in the second quarter were down 27 per cent on the same period of last year.

The accountancy giant said firms were taking a cautious approach in response to political uncertainty following the Brexit vote and General Election while. Oil and gas companies had taken steps to adapt to low commodity prices.

R3’s findings are based on a range of information including accounts filed by companies.