Some 630,000 businesses in the UK are in “serious distress”, according to Begbies Traynor’s latest Red Flag Alert research for Q4 in 2020.
This is a 13% increase from Q3, a rise of 557,000, as the country returns to pandemic lockdown restrictions.
Financial distress increased in all 22 sectors monitored by the research, representing a 27% year-on-year rise in “significant distress” since Q4 in 2019.
London has experienced a 33% increase in significant financial distress since 2019, the largest increase of any region in the UK.
Julie Palmer, a partner at Begbies Traynor, said: “These figures give an insight into some of the financial stresses that have been building in UK business.
“Without the financial aid and support measures that the government has put in place during the pandemic insolvency levels would have been much higher, however the sad truth is that for many companies this will provide little more than a stay of execution as debt levels become unmanageable and structural changes across many sectors take their toll.”
Ric Traynor, the group’s executive chairman, said: “UK businesses have been dealt another body blow by the latest national lockdown. 2020 was a devastating year for thousands of businesses as they fell deeper into financial distress and Q1 2021 seems to be offering little hope of an upturn in the market.
“The government’s extended furlough and financial support measures will provide some relief and certainly save a significant number of businesses from entering into insolvency in the short term.”