The number of companies in financial distress has risen by 4% in the past year.
Corporate recovery specialist Begbies Traynor’s latest Red Flag Alert reveals 610,405 UK businesses are in “significant distress”.
It also shows a 11% rise in “critical” and 24% surge in “significant” distress levels compared with the final quarter of 2019, before the pandemic.
A total of 23,885 County Court judgments – a leading indicator of distress – were served in the final three months of 2022. This is up 52% on 2021 and 77% higher than pre-Covid.
Begbies Traynor said businesses are increasingly struggling due to a “toxic combination” of Covid debt, inflation and consumers reining in their spending.
“We all came into 2022 hopeful that the pandemic was fully behind us and better times were ahead, only for Russia’s invasion of Ukraine to unsettle the global economy, leading to spiralling inflation and soaring energy bills and laying the foundations for what looks like a global recession,” said Begbies Traynor partner Julie Palmer. “In the UK in particular, strikes are also piling on the pressure.”