Number of companies in financial distress in Britain reaches 738,000 — The Guardian

In the United Kingdom, the number of businesses in significant financial distress reached 738,144 in the third quarter of 2026. This is 1.6% higher than in the same period last year and is the highest figure since BTG began publishing its Red Flag report in 2004, The Guardian reports.

Most vulnerable sectors

The highest numbers of companies with significant financial problems were recorded in business support services — 118,695, construction — 108,340, and the real estate sector — 99,908.

In the hospitality sector, the number of troubled bars and restaurants rose by 5%, to 18,866. The number of food and drug retailers in distress increased by more than 7%, to 19,269. BTG, one of Britain’s largest insolvency specialists, changed its name from Begbies Traynor in February.

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Debts to the tax service

According to data obtained by BTG through a freedom of information request, as of the end of August, British businesses owed HMRC £27.3 billion in unpaid VAT, corporation tax and PAYE. This is lower than the £51.3 billion peak during the COVID-19 pandemic, but exceeds the pre-pandemic level of £11.4 billion. Since the peak, the debt has fallen by about £24 billion.

BTG chief executive Mark Fry linked the pressure on companies to rising employment costs, inflation, more expensive energy and high borrowing costs. According to him, these factors affect both the operations of small businesses and the ability of large companies to compete internationally.

The data were published ahead of the budget presentation, from which businesses expect additional support. Prime Minister Andy Burnham previously said he intended to reduce regulatory barriers for companies, simplify corporate reporting requirements and extend the suspension of import tariffs on goods used by businesses.