Nearly 20,000 Scottish businesses close in a year

Nearly 20,000 businesses in Scotland have closed down in a year, figures show.

The Scottish Government Business in Scotland report, released on Wednesday, shows 19,805 fewer businesses in March than the same time last year.

The change is a 5.4% drop from the previous year, falling to 344,505 companies in the private sector – the lowest figure since 2014.

The report bucks a significant trend in Scotland over the last two decades, which has seen an increase of almost 45% in the number of firms.

According to the report, the majority of the decrease came from unregistered businesses, which fell by 10.3% (19,015) to 165,835.

But registered businesses also saw a drop of 790 (0.4%) to 178,670.

Unregistered companies do not qualify for VAT registration because they have a turnover of less than £85,000 per year, or for PAYE registration due to there being no employees other than the owner.

The Scottish Conservatives said the figures showed the “devastating impact” of Covid-19 on the Scottish economy.

The timeframe for the report begins as Scotland was put into lockdown, with restrictions imposed on most of the country throughout the following year.

“These small enterprises are the bedrock of our economy, and though we are beginning to see signs of recovery, it will take time to get back to pre-pandemic levels,” said the party’s economy spokeswoman Liz Smith.

“UK Chancellor Rishi Sunak pledged £150m in his Budget last month to help thousands of small and medium-sized businesses in Scotland grow back stronger.

“The SNP must now take similar steps to support small businesses in Scotland – and finally start prioritising our economic recovery.”

Firms headquartered outside the country, the report added, accounted for 54.4% of turnover in Scotland, with only 3.3% of businesses being based elsewhere.

A Scottish Government spokesperson said: “This reduction clearly reflects the impact of the coronavirus (Covid-19) pandemic and is part of an overall reduction of almost 390,000 business across the whole of the UK.

“We know how difficult the pandemic has been for business and that is why we are doing all we can to support them recover.

“On top of the £4.4bn of support given during the pandemic, we are now taking forward a range of measures to ensure businesses have access to the services, skills and opportunities to help them continue to operate and prosper.”