Number of UK businesses in financial distress ‘at two-decade high’

Administrator BTG says 738,144 firms struggling as calls grow for more support for private sector in budget

The number of UK businesses in financial distress has hit its highest level in more than two decades, as pressure grows on the chancellor to provide more support to the private sector in Wednesday’s budget.

There were 738,144 businesses in “significant” financial distress in the third quarter of this year, up 1.6% compared with the same period last year, according to BTG. That is the highest level since the administrator’s closely watched “red flag” report began in 2004.

The UK’s support services, construction and real estate sectors were among the most vulnerable, with the highest numbers of businesses in significant distress – at 118,695, 108,340 and 99,908 respectively.

The hospitality industry was hardest hit this year, with a 5% rise in the number of bars and restaurants in distress to 18,866. Struggling food and drug retailers rose by more than 7% to 19,269, according to BTG, which is one of the UK’s biggest insolvency practitioners and changed its name from Begbies Traynor in February.

The growing strain on UK companies comes as the chancellor, John Healey, prepares to give his first budget on Wednesday, against an increasingly volatile backdrop as the war in the Middle East disrupts the global economy, putting pressure on public finances and reigniting the cost of living crisis.

The chancellor has vowed to use the budget to provide households and businesses with more “breathing space”.

Mark Fry, the chief executive of BTG, said British businesses were “battling a combination of rising employment costs, inflationary pressures, higher energy prices and elevated borrowing costs.