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Company debts increase by more than double, leaving many UK businesses in extreme financial distress, new research shows

5 August 2019

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Company debts increase by more than double, leaving many UK businesses in extreme financial distress, new research shows

New data from Red Flag Alert, for Q2 2019, shows that 14% of all active UK businesses are in extreme significant financial distress as the average debt of a company increases by 122%, now peaking at £66,000. 

The following lists some of the industries which have seen an increase in businesses experiencing significant financial distress between Q2 2018 and Q2 2019:

Real Estate and Property – a 15% increase (43,085 to 49,342 companies)

Online Retail – a 12% increase (5,243 to 5,871 companies)

Hotels and Accommodation – a 8% increase (5,095 to 5,516 companies)

Sports and Health Clubs – a 5% increase (8,481 to 8,940 companies)

Financial Services – a 5% increase (now at 12,666 companies)

Leisure and Cultural Activities – a 4% increase (12,524 to 13,069 companies)

It is believed that the property, retail and hospitality sectors are the worst affected. This is because these sectors rely on consumer spending which is at its lowest level since the mid-1990s. 

The effect of this financial distress, particularly from the financial services and real estate sector’s poor performance, has affected London’s overall performance.  More than 5,000 London based businesses have faced financial difficulty in the last year, this being the highest amount from any region researched in Q2 2019.

The instability of UK businesses is believed to be affected quite heavily from the uncertainty of Brexit, politics and the flat economy. Once there is an outcome to Brexit, stability looks to return, consumers are expected to spend again and confidence is set to return.

For the full length release of this data, please see here . Please see below for some infographics to outline these findings.

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