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More than 55,000 UK companies are in serious financial trouble and at risk of collapse without recovery in the coming year, according to research.
experts warned that the coming autumn Budget “Immediate support must be provided to avoid a wave of failures”, especially among small businesses.
Latest Quarterly Red Flag Alert Report by Begbies Traynor The number of companies in “severe” financial distress in the third quarter of 2025 has increased by 78% to 55,530 compared with a year earlier.
It said this represents a 12.6% increase over the June quarter, reflecting a rapidly worsening situation for more than 6,000 businesses.
Consumer-facing businesses have come under particular threat in recent months, as they face pressure from rising labor costs and rising inflation.
The data showed that in “severe” conditions there was a 96.7% increase in leisure and cultural firms, a 92.5% increase in hotels and accommodation, and an 85.6% increase for retailers.
Begbies Traynor also found that the number of companies in “significant” financial distress rose 14.8% year-on-year to 726,594 in the latest quarter.
This comes amid fears that the Chancellor Rachel Reeves The UK may turn to tax increases to help address the fiscal black hole in its state finances.
Julie Palmer, partner at Begbies Traynor, said the problems facing many UK businesses “show that the UK economy is in real trouble”.
He said: “With more than 55,000 companies now in serious financial distress, urgent support must be provided in the upcoming Budget to avoid a wave of failures, especially among SMEs who are already operating on a knife edge.
“Unfortunately for UK businesses, inflation is not going anywhere, putting further pressure on companies at a time when wages, tax and financing costs are already high.
“Many companies have no room to maneuver, and are reducing investments simply to survive, rather than investing for growth – which is the opposite of what the economy needs if it is to recover and grow.”