BUSINESS LIVE: Financial problems are skyrocketing; The value of luxury brands is declining; S4 welcomes the cost reduction

The number of UK companies in ‘critical financial distress’ skyrocketed in the fourth quarter of 2023, hitting every sector of the economy as companies struggled with rising debt levels and lackluster growth, new figures show.

Begbies Traynor’s Red Flag Alert report shows that the number of businesses in critical financial distress has grown by around 25 percent for the second consecutive quarter, to 47,477.

Historically, a significant percentage of companies identified by Red Flag Alert as being in critical financial distress will enter bankruptcy within the next year, the group said.

Julie Palmer, partner at Begbies Traynor, added:

‘After a difficult year for UK businesses, marked by high interest rates, rampant inflation, weak consumer confidence and rising and unpredictable input costs, we are now seeing this perfect storm hitting every corner of the economy.

‘With the era of cheap money firmly in the past, hundreds of thousands of businesses in Britain who built up affordable debt in those heydays must now come to terms with the extra burden this will have on their finances.

‘For some, a better-than-expected Christmas may put these concerns aside for a little longer, but the rapid growth in the level of critical financial distress signals an economy is waking up to the danger of debt-laden businesses. a higher rate environment.”