UK Retailers Face Surge in Financial Distress as Consumer Spending Declines

Over 2,100 businesses in the retail sector are in critical financial distress, driven by rising costs, weak consumer confidence, and shifting shopping habits.

• The number of UK retailers in critical financial distress rose by 25% in the final quarter of 2024 to 2,124, according to insolvency specialists Begbies Traynor.
• General retail businesses, including furniture and household item sellers, saw a 29% increase in critical distress, while food and drug retailers experienced a 17% rise.
• Boxing Day footfall across UK retailers fell by 7.6% compared to 2023, with many consumers opting for online shopping or pre-Christmas purchases instead.
• Retailers are struggling with rising operational costs, weak consumer confidence, and competition from low-cost online platforms like Temu and Shein.
• Despite a slight annual decline in critical distress cases, analysts predict elevated insolvency levels in 2025 due to increased wage costs, national insurance hikes, and tax changes.

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