Red alert as number of firms in 'critical' distress soars 78%

THE number of UK businesses in “critical” financial distress has surged as the economy cries out for certainty in Rachel Reeves’s Budget later this month.

- By Maria Ward-Brennan

They rose 78% year-on-year, to 55,530 in the third quarter of 2025, up from 31,201 in the same quarter last year.

Economic uncertainty and inflation are taking a heavy toll, according to the latest Red Flag Alert report from business recovery firm Begbies Traynor.

Of the 22 sectors covered by the report, 21 experienced a rise in “critical” financial distress of more than 40% versus the same period last year.