Critical financial distress rising

More than 47,000 UK businesses started 2024 on the edge of collapse, according to Begbies Traynor Red Flag Alert report.

And, the worry now is the speed at which critical financial distress is growing – it is up 25% for the second consecutive quarter.

The report found 539,000 UK business are also in ‘significant’ financial distress.

The key sectors driving this increase in distress are construction, health and education, real estate and property services, and support services.

Julie Palmer, a partner at Begbies Traynor, said: “After a difficult year for British business, that was characterised by high interest rates, rampant inflation, weak consumer confidence rising and unpredictable input costs, we are now seeing this perfect storm impacting every corner of the economy.

“Now that the era of cheap money is firmly a thing of the past, hundreds of thousands of businesses in the UK, who loaded up on affordable debt during those halcyon days, are now coming to terms with the added burden this will have on their finances.”