UK firms ‘could be pushed over edge’ after record rise in financial distress
UK firms ‘could be pushed over edge’ after record rise in financial distress
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An insolvency expert has raised fears that UK businesses will be pushed “over the edge” after new figures showed a record-breaking rise in the number of firms at serious risk of collapse. Consumer-facing sectors such as hotels, leisure and retailers have particularly been under pressure, advisory firm Begbies Traynor said.
Its latest Red Flag Alert report showed that about 46,850 businesses were in “critical” financial distress over the final three months of 2024. This was a 50% increase on the number of firms on the brink of collapse over the previous three-month period.
Julie Parmer, a partner at Begbies, said this increase, across nearly every sector, represented an “unprecedented level of growth in the number of firms who are at serious risk of entering insolvency in the next 12 months”. The growth in distress was particularly sharp among hotels and accommodation businesses, which jumped by nearly 84%, leisure firms, up by 76%, and retailers, up by nearly 50%.
“After a disappointing Christmas, consumer-facing industries, in particular, are feeling the strain, with rising operational costs and higher wages adding to an already difficult situation,” Ms Palmer said. “With many such businesses already operating on thin margins, I fear the current situation will undoubtedly push some over the edge.”.
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