Number of UK businesses in 'critical' financial distress jumps 21%, survey finds
By Benjamin Chiou
Date: Monday 28 Jul 2025
(Sharecast News) - Nearly 50,000 business across the UK are currently in "critical financial distress" as the volatile macreconomic backdrop continues to pile pressure on the private sector, according to a survey out on Monday from corporate recovery specialists Begbies Traynor.
According to the consultancy's quarterly Red Flag Alert report, the number of firms in "critical" financial distress totalled 49,309 in the second quarter, up 8.6% over the first three months of the year and 21.4% higher than last year.
All 22 sectors covered by the survey saw an increase in firms reporting critical distress compared with a year earlier, though consumer-facing industries saw the steepest increases.
According to Begbies Traynor, the number of bars and restaurants reporting critical distress leapt 41.7% compared with 12 months ago, while travel and tourism saw a 39.0% increase and general retailers registered a 17.8% jump.
Meanwhile, those suffering from "significant" financial distress rose 10.8% year-on-year to 666,876 businesses.
"Financial distress has intensified over the past twelve months in every corner of the economy. This means businesses across the UK are facing significant headwinds and many will have to review where they can tighten their budgets or restructure to give themselves more stability in the immediate future," said Begbies Traynor partner Julie Palmer.
Palmer said there was a "degree of optimism" amongst business leaders 12 months ago, but confidence now is in "short supply".
"Households are still grappling with their finances, and this is keeping consumer confidence volatile. The knock-on effect of this is clear to see in the consumer-facing sectors where margins are thin, growth is hard to come by, and the impact of higher employee costs is pushing many businesses to the brink of collapse," she said.
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