This year could see record company failures if trends continue

An astonishing 494,000 UK companies are in financial trouble

The Insolvency Service have issued shocking statistics about the dire financial state of thousands of companies in the UK.

The Government’s Insolvency Service quoted research from Begbies Traynor the insolvency firm after they reported on the final quarter of 2019. It revealed that 494,000 companies were in 'significant financial distress.' In particular those in the real estate and property, support services, construction and retail sectors were most affected.

The Insolvency Service reported: “Begbies Traynor defines 'significant financial distress’ as when a company has county court judgements of less than £5,000 filed against them.

“Across the 22 sectors monitored by the Red Flag Alert research, 15 sectors witnessed increases in significant financial distress between the third and fourth quarter of 2019, compared to 13 out of the 22 sectors between Q4 2018 and Q4 2019. This indicates that Q4 2019 saw the broadest rise in financial distress.

“The sector most badly affected was the real estate and property sector, with a 13 per cent increase in the number of businesses in significant financial distress between Q4 2018 and Q4 2019. This represented the highest year-on-year percentage increase across any sector measured in the latest Red Flag Alert research.

“Following a less than fortuitous Christmas period, there was also a 2 per cent increase in the number of retailers in significant distress since Q4 2018. Online retailers also suffered, with an 8 per cent year-on-year increase in the number facing significant financial distress.”

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