BTG Consulting PLC on Friday said its quarterly survey found more UK companies in ‘critical’ financial distress than at the end of the first quarter and a year before.
The Red Flag Alert, compiled by the Manchester-based insolvency adviser, found 53,756 businesses in ‘critical’ financial distress in the second quarter, an increase of 9% from 49,309 a year before.
‘Critical’ financial distress is the more severe category used by the report, with ‘significant’ distress being the other.
BTG, formerly known as Begbies Traynor Group, said consumer-facing industries remained the worst affected, experiencing some of the highest annual increases in ‘critical’ financial distress.
Julie Palmer, a partner at Begbies Traynor, said persistent financial distress indicated that businesses were “walking a tightrope” in the second half of 2026. Palmer added that higher energy or inflation costs could accelerate financial distress, potentially prompting many to refinance to improve their situations. This would be particularly true for “consumer-facing industries reliant on discretionary spending.”
Palmer added: “Against this backdrop, businesses and investors will be looking for support and clarity as soon as possible from the government. Business leaders will be desperate to avoid the prolonged period of uncertainty they experienced before the last autumn budget and will be hoping the new prime minister provides them with some clarity. As we have seen before, most firms can navigate choppy waters if they have time to prepare.”
AJ Bell’s head of markets, Dan Coatsworth, said: “A growing number of UK companies are at breaking point as they struggle in an uncertain world.
“The combination of lacklustre economic growth, pressures linked to higher costs of employment, energy and raw materials, and cautious spending by businesses and consumers are an accident waiting to happen.”
Shares in BTG were up 1.8% at 111.00 pence on Friday morning in London.
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