Critical’ financial distress leaps by a third in Q1 2026

More than 60,000 UK firms now on cliff edge as pressures on businesses mount

Highlights:

• In Q1 2026, the number of UK businesses in ‘critical’ financial distress increased more than a third (36.9%) year-on-year to 62,193 (Q1 2025: 45,416)
• All 22 industries monitored by Red Flag Alert experienced a double-digit percentage increase in ‘critical’ financial distress versus the same period last year
• Consumer facing industries remain under severe pressure with Hotels and Accommodation (+69.3%), Leisure and Cultural Activities (+65.9%) and Sports and Health Clubs (+51%) seeing some of the highest annual increases in ‘critical’ distress
• ‘Significant’ financial distress increased 9.6% year-on-year to 634,867 firms (Q1 2025: 579,276)
• Construction (+10.5%, Q1 2026 – 95,355), Support Services (+7.2%, Q1 2026 – 92,983) and Real Estate and Property Services (+15.1%, Q1 2026 – 79,118) experienced the highest rate of year-on-year growth for companies in ‘significant’ financial distress

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