***Sharp Increase in Financial Distress for UK Businesses in Q1 2024***

The latest research from Begbies Traynor has revealed a concerning trend in the financial health of UK businesses, with a significant increase in ‘significant’ financial distress compared to the previous year. The data shows that 554,554 companies are currently experiencing financial distress, a sharp rise of 30.8% compared to Q1 2023.

All 22 sectors covered by the Red Flag Alert research have seen a double-digit growth in financial distress, with the Construction, Food & Drug Retailers, and General Retailer sectors leading the increase in distress levels. In particular, these sectors saw a rise of 38.6%, 40.8%, and 38.7% respectively in Q1 2024.

The research also highlights a worrying increase in ‘critical’ financial distress, with 40,174 UK businesses now classified as being in critical distress. This marks a 20.1% increase compared to the previous year, making these businesses especially vulnerable to failure in the next 12 months.

Julie Palmer, Partner at Begbies Traynor, expressed concern about the current economic climate, stating that many businesses are struggling to cope with the ongoing pressures that have been exacerbated by the pandemic. She highlighted the impact of rising debt levels and uncertain consumer confidence on the increasing number of businesses entering insolvency.

Ric Traynor, Executive Chairman of Begbies Traynor, echoed these concerns, pointing to growing geopolitical instability as a contributing factor to the economic challenges facing UK businesses. He emphasized the need for a comprehensive solution to address the pressing issues facing businesses and prevent further corporate insolvencies.

Overall, the data paints a grim picture of the financial health of UK businesses, with the current trend of increasing financial distress and insolvencies likely to continue without significant intervention to improve the economic outlook.