Business advisers Grant Thornton warned that, on current trends, Scotland could have a total of 830 corporate insolvencies this year - the highest annual figure since the late 1980s.

In recent months, the retail sector in Scotland has seen a "dramatic" rise in insolvencies, from eight in the first quarter of the year to 14 in the second quarter.

The total of 22 retail insolvencies for the year so far compares with 28 for the whole of last year.

The dramatic rise in retailing failures challenges the belief that the public can buy the economy back to general health.

Matt Henderson Grant Thornton partner

Scotland's manufacturing sector also saw an increase in insolvencies, from 27 in the first quarter to 31 in the second quarter.

Overall, there were 175 company insolvencies in Scotland in the second quarter, a sharp drop from the previous quarter's 240.

However, that represents a big rise on the 141 insolvencies in the second quarter of last year.

No insolvencies were reported in agriculture and horticulture, food and drink wholesale activity, retail motor vehicles, or filling stations in the last quarter.

Matt Henderson, a partner with Grant Thornton, said: "These latest Scottish corporate failure statistics tell us we are still suffering from the effects of the economic downturn from last year, and there is continued economic uncertainty which continues to impact on business confidence.

Market pressures

"The dramatic rise in retailing failures challenges the belief that the public can buy the economy back to general health."

He said the decline in manufacturing showed Scotland was still sensitive to outside market pressures.

And Mr Henderson warned that prospects remain gloomy.

"The current statistics are indicative of the economic problems which probably began in early 2001," he said.

"At that time there was a general belief that the economy would be in better shape by now.

"However most predictions indicate the rest of 2002 is going to be much tougher than expected and the projected figure of over 800 corporate insolvencies would be extremely bad news for Scotland's economy."