Big leap in number of firms in distress

THE number of UK businesses facing ‘critical’ financial distress has soared as they demand clarity from Rachel Reeves’ November Budget.

- MARIA WARD-BRENNAN

Businesses experiencing ‘critical’ financial distress jumped by 78% year-on-year, reaching 55,530 in the third quarter of 2025, compared with 31,201 during the same period last year.

Begbies Traynor’s latest Red Flag Alert report highlighted that economic uncertainty and inflation have placed significant strain on the UK economy.

Out of the 22 sectors analysed in the report, 21 saw an increase in ‘critical’ financial distress exceeding 40% compared with the corresponding period last year.

Consumer-facing sectors are experiencing the most acute pressure, particularly leisure and cultural activities, hotels and accommodation, and general retailers.