28th June 2026
Business failures across the UK have climbed since the pandemic, but the shape of the crisis differs between Scotland and England & Wales. Scotland has seen a steady rise in insolvencies since 2021, while England & Wales have experienced even sharper increases — and the sectoral pressures behind these trends are not identical.
This article breaks down:
Scotland’s insolvency trends
How they compare with England & Wales
Which sectors are driving distress
What this means for 2024–25
Scotland’s Insolvency Trend: A Steady Climb Since 2021
Scotland’s total business insolvencies have risen every year since the pandemic low in 2020:
2019: 1,029
2020: 643 (pandemic support suppressed failures)
2021: 752
2022: 1,062
2023: 1,234
That means 2023 insolvencies were 20% higher than pre‑pandemic 2019.
Compulsory liquidations are surging
Compulsory liquidations in Scotland rose from 238 in 2022 to 439 in 2023 — an 84% increase.
This reflects more aggressive creditor action, especially from HMRC.
CVLs remain high
Creditors’ Voluntary Liquidations (CVLs) have stayed above 700 per year since 2021, more than double pre‑COVID levels.
England & Wales: Higher Volumes, Faster Growth
England & Wales have seen even stronger upward pressure.
In Q1 2024, corporate insolvencies rose 2.4% year‑on‑year, reaching 6,602 cases.
They were also 13.4% higher than the previous quarter.
By contrast, Scotland’s insolvencies fell 3.1% in the same period (April–June 2024 vs 2023).
Scotland has experienced a steady rise in business insolvencies since 2021, but the pace has been more moderate than in England and Wales. While Scotland’s 2023 insolvency levels were about 20% higher than in 2019, England and Wales saw a much sharper increase of over 55% when comparing early‑2024 figures with pre‑pandemic levels. In the first quarter of 2024, Scotland actually recorded a 3.1% year‑on‑year decline, whereas England and Wales saw a 2.4% increase, continuing their upward trajectory. Compulsory liquidations have surged in Scotland — rising 84% in 2023 compared with 2022 — but England and Wales still see a far greater dominance of CVLs, which remain the primary driver of insolvency volumes there. Overall, Scotland’s trend is upward but steadier, while England and Wales are experiencing a more aggressive and sustained rise in business failures.
Why the difference?
R3’s analysis suggests Scotland may have recovered slightly faster from the cost‑of‑living shock — or it may simply be lagging behind England & Wales.
Sectoral Breakdown: Which Industries Are Hurting Most?
The UK Insolvency Service’s industry tables (March 2024 release) provide sector‑level data across England, Wales, and Scotland.
Below is a synthesis of the UK‑wide sector trends, with notes on how Scotland compares.
Construction
UK‑wide: One of the highest insolvency rates due to material inflation, labour shortages, and cash‑flow strain.
Scotland: Mirrors UK trend; construction is consistently among the top three sectors for failures.
Hospitality (Accommodation & Food)
UK‑wide: Severe distress from energy costs, wage inflation, and reduced consumer spending.
Scotland: Hit even harder due to tourism seasonality and staffing shortages.
Business Rescue Experts highlight hospitality as a key driver of Scotland’s rising insolvencies.
Retail
UK‑wide: High insolvency levels driven by weak consumer demand and rising rents.
Scotland: Similar pattern, though Scotland’s smaller retail base means fewer absolute failures.
Wholesale & Logistics
UK‑wide: Insolvencies rising due to fuel costs and supply chain disruption.
Scotland: Less severe than England & Wales but still elevated.
Professional & Business Services
UK‑wide: Increasing failures as SMEs struggle with interest rates.
Scotland: Rising but at a slower pace than consumer‑facing sectors.
5. Why Insolvencies Are Rising Across the UK
Across all nations, several shared pressures are driving failures:
High interest rates
Persistent inflation
Energy and wage cost increases
HMRC returning to aggressive enforcement
Post‑COVID debt overhang
But Scotland has two additional factors:
A higher proportion of small, thin‑margin businesses
Greater exposure to hospitality and tourism volatility
6. Outlook for 2024–2025
Based on Insolvency Service releases and R3 commentary:
England & Wales are likely to remain at historically high insolvency levels.
Scotland may see a delayed rise, especially if interest rates stay elevated.
CVLs will continue to dominate across the UK as directors choose controlled wind‑downs.
Compulsory liquidations will remain high due to HMRC enforcement.
Scotland’s insolvency landscape is worsening — but not as sharply as England & Wales. The UK’s overall picture is one of sustained financial stress, with construction, hospitality, and retail leading the downturn. Scotland’s unique mix of small businesses and tourism‑dependent sectors means it faces its own vulnerabilities, even if its short‑term trend appears slightly softer.