‘Significant financial distress’ experienced by more than half a million UK businesses
The latest Red Flag Report has indicated that around half a million businesses are currently in significant distress – up 81 per cent from a similar report conducted in 2016. According to the study, 494,000 businesses in the UK were in significant financial distress at the end of 2019; with real estate and property being one of the worst affected sectors.
Breaking down the study by 22 sectors, the research showed that 15 sectors have experienced an increase in distress between the third and fourth quarter of 2019, compared to 13 sectors between Q4 2018.
Property investors, for example, experienced a 30 per cent rise in significant distress compared to the same period in the previous year.
Distress levels were also up by seven per cent in the development of construction project sector and rose by four per cent in the domestic construction sector, while the number of retailers in significant distress rose by two per cent.
The report also looked at the background of the businesses affected and found that a considerable number had been incorporated after 2014, which suggests that start-ups and newly established businesses are the most at risk of insolvency.
More than 126,000 London businesses were in significant distress according to the study, while the other UK regions combined has around 358,000 businesses struggling with their finances.