‘Red Flag’ alert as financial distress hits new heights

According to the latest report from Begbies Traynor’s ‘Red Flag Alert’ for Q4 2024, businesses in Derby and Nottingham are facing rising financial distress amid ongoing economic pressures.

In Derby, 795 businesses are now classified as being in ‘significant’ distress – a 23.5% increase compared to the same period last year.

Construction businesses are the hardest hit, with 108 firms facing financial trouble.

Sectors like support services and real estate and property are also seeing sharp increases in distress, up by 42.7% and 19.3%.

Nottingham is experiencing similar challenges, with 2,771 businesses reported in significant distress – a 21.7% annual rise.

The support services sector is particularly affected, with 403 businesses struggling. Health & education and retail businesses in Nottingham have seen distress levels surge by 45.2% and 38%.

Kris Wigfield, partner at Begbies Traynor in Nottingham said: “Even at this very early stage, the outlook for the rest of 2025 is challenging, and many companies are struggling to adapt to the compounding issues they are facing. Unfortunately, there is no easy fix, which will be very unsettling for businesses that are struggling to tread water already.

“For many companies, which were already dealing with rising operational and borrowing costs, the increase in national insurance contributions and the national minimum wage announced at the last UK Budget could result in further financial strain at a time when confidence is already low. So, in the absence of a reduced tax burden and a strong economic recovery, unfortunately, it is likely that the number of insolvencies will continue to rise in 2025 as firms struggle to cope with a perfect storm of rising costs, financial instability and fluctuating market conditions.”

Nationally, over 650,000 businesses are facing significant distress, a 21.3% increase from last year, while the number of companies in ‘critical’ distress has soared by 50.2%.