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UK Firms in Critical Financial Distress Reach 49,309 in Q2

Higher employer National Insurance contributions alongside minimum wage hikes are squeezing small and medium businesses facing inflationary pressures plus rising borrowing costs.

Just over 40 per cent of bars and restaurants have suffered a worsening in their financial health
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Overview

  • Begbies Traynor’s Q2 Red Flag Alert found 49,309 UK firms in critical financial distress, marking a 21.4% year-on-year rise and an 8.6% increase from Q1.
  • All 22 sectors tracked registered higher critical distress, with bars and restaurants up 41.7%, travel and tourism rising 39%, and general retail climbing 17.8%.
  • Many SMEs cite April’s hikes to employer National Insurance and the national minimum wage as tipping points after pandemic support ended and borrowing costs climbed.
  • The number of companies in the “significant” distress category climbed 10.8% year-on-year to 666,876 businesses.
  • Regional data highlight uneven pressures, with Yorkshire reporting above-average rises in early-stage distress across key sectors.