At the end of the previous year, nearly 50,000 companies were in a state of severe financial distress, as revealed by a report that is widely monitored.
These businesses struggled with rising interest rates and the end of the era of easily accessible, low-cost funding.
The Red Flag Alert report by insolvency experts Begbies Traynor indicated that 47,477 businesses were on the brink of failure in the last quarter of the year, marking a 25.9% increase from the quarter before.
This rise represents the second successive quarter where severe financial distress has escalated by approximately a quarter.
According to the report, all 22 sectors analyzed experienced a rise in severe financial distress, with the construction and real estate industries being particularly affected.
Julie Palmer, a partner at Begbies Traynor, commented on the situation: “British businesses have faced a challenging year marked by high-interest rates, soaring inflation, low consumer confidence, and fluctuating and rising costs.
This combination of factors is now affecting every sector of the economy.
“With the period of low-cost funding now behind us, numerous UK businesses that had previously taken on affordable debt are now grappling with the increased financial strain this brings.”
She further noted: “Regrettably, for many British businesses that should be entering 2024 with some optimism, the new year instead presents a struggle for survival. The debt crisis that has been looming for years now seems to be unfolding across the nation.”
