Number of UK firms in ‘significant financial distress’ hits record high
The number of UK businesses in significant financial distress has risen to almost 500,000, hitting the highest level since records began 16 years ago.
The latest research showed that the number of firms facing significant difficulties has soared 81 per cent since 2016, reaching 494,000 in the fourth quarter of last year.
Recently formed companies that were registered since 2014 were the most likely to report distress, while the retail, property, support services and construction sectors were the worst affected.
Real estate and property companies in significant financial trouble have jumped 13 per cent in a year to 53,000, according to research by restructuring firm Begbies Traynor.
Meanwhile, the number of retail firms in distress increased two per cent to 31,615, and the number of distressed online retailers spiked eight per cent over the year.
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Julie Palmer, partner at Begbies Traynor, said: “Businesses and the UK economy as a whole will want to avoid a repeat performance of 2019, where distress increased to record levels on the back of ongoing uncertainty around Brexit.
“These figures clearly demonstrate the impact of this indecision, and with political certainty and a clear Brexit path, UK businesses should, at last, be able to plan for 2020 with a greater sense of clarity.”
Palmer added: “Currently, we do not know if the failing performance within some sectors is due to short term confidence issues, or more fundamental economic and structural issues.”
The data also highlighted the disparity between London and the rest of the UK. There were 126,000 businesses in distress in the capital, while in the other UK regions more than 358,000 firms were in trouble.