Record 738,000 UK businesses in significant financial distress, BTG report finds
The insolvency firm formerly called Begbies Traynor counted more stretched companies than at any point since 2004, though the number close to collapse fell by a fifth.
By Daily Oracles News Team2 min read
More UK businesses were showing signs of financial strain at the end of September than at any time in more than two decades of tracking, according to the insolvency and advisory group BTG Consulting.
Its quarterly Red Flag Alert, published on Tuesday, counted 738,144 companies in significant distress in the third quarter. That is 1.6% more than a year earlier, when the figure was 726,594, and the highest since the research started in 2004. Twenty of the 22 sectors it monitors recorded a rise.
Businesses in critical distress, a smaller group showing the warning signs that usually come before insolvency, moved the other way, falling to 44,033 from 55,530, a drop of 20.7%. BTG, which until recently traded as Begbies Traynor, said the pattern pointed to a large number of firms operating with very little headroom rather than a wave of imminent failures.
Where the strain is building
Property businesses saw one of the sharpest increases. The real estate and property services category reached 99,908 companies in significant distress, up 9.7% in a year. Construction rose 4.6% to 108,340, and the largest group of all, support services, climbed 2.9% to 118,695.
Consumer-facing trades also edged higher. Bars and restaurants were up 5.0% to 18,866, and food and drug retailers rose 7.3% to 19,269. BTG singled out leisure and hospitality as its main worry for the run-up to Christmas.
By region, London had by far the largest count, with 234,058 businesses in significant distress, followed by the South East on 121,370. The North East and Northern Ireland had the fewest, at 12,563 and 11,055.
The bills ahead
BTG linked the rise to a run of costs landing on companies at once: higher employment costs, inflation, energy prices and borrowing costs that remain elevated. It also pointed to forecasts of a sharp rise in the household energy price cap in January, which it expects to squeeze spending in shops, pubs and restaurants.
A freedom of information request by the firm found that businesses owed HMRC £27.3bn in unpaid VAT, corporation tax and PAYE as of 31 August.
The report was timed for the run-up to today's Budget, and BTG used it to call for action on red tape, employment law, tax and energy and borrowing costs. Its next Red Flag Alert, covering October to December, would normally follow in January and will cover the first weeks after the Budget.
