LEVELS of “critical” distress among Scottish companies in the third quarter were down sharply on a year earlier, a survey has revealed.

However, the survey from business recovery specialist Begbies Traynor showed a small year-on-year rise in instances of “significant” business distress, which are less serious than the critical indicators but are viewed as early signs of financial problems.

Instances of “critical” business distress in Scotland totalled 64 in the period from July to September, less than half of the corresponding figure of 129 for the third quarter of last year.

However, Scotland’s firms showed a total of 12,732 instances of “significant” financial distress during the third quarter. Levels of significant business distress in the July to September period were up by four per cent on the third quarter of last year.

Such year-on-year comparisons strip out the impact of seasonal fluctuations.

Ken Pattullo, group managing partner in Scotland for Begbies Traynor, said: “A fall is always welcome, and especially in the critical instances of distress that illustrate the businesses that are closest to outright failure.”

However, he added: “That said, the good news is tempered somewhat by a rise in significant distress that tends to show a longer term picture of the wider economy.”

Mr Pattullo highlighted the large number of sectors showing an improvement in indicators of critical distress, declaring that food and beverage manufacturing, retail, and professional services had all recorded reductions of more than 30 per cent, having seen hikes in previous quarters.