More than 41,000 South West companies in ‘significant’ economic distress

More than 41,000 South West companies are now classed as being in ‘significant’ economic distress, according to the latest figures from Begbies Traynor’s ‘Red Flag Alert’, which monitors the financial health of UK companies.

While this represents a quarterly decrease of 14.4%, there has been an annual rise of 4.9% in the region.

Cornwall (+9.2%, Q1 2025 – 2,057), Gloucestershire (+8.3%, Q1 2025 – 5,157), Wiltshire (+5.3%, Q1 2025 – 5.054), Devon (+5.2%, Q1 2025 – 8,554), Somerset (+4.6%, Q1 2025 – 13,083) and Dorset (+1.3%, Q1 2025 – 7,259) have all experienced increases of ‘significant’ distress in the past year. However, all of these regions experienced a reduction in distressed businesses in the past quarter of 11.9%, 15.0%, 12.7%, 13.8%, 15.3% and 14.7%, respectively.

A similar pattern was observed in cities and towns. Bristol (+6.4%, Q1 2025 – 3,954), Taunton (+17.1%, Q1 2025 – 705), Bath (+6.6%, Q1 2025 – 596), Cheltenham (+2.8%, Q1 2025 – 1,377), Plymouth (+2.4%, Q1 2025 – 965) and Salisbury (+2.2%, Q1 2025 – 284) have all seen increased numbers of businesses in ‘significant’ distress in the past year. However, the numbers bounced in the first quarter by 9.6%, 19.3%, 8.4%, 14.7%, 18.1% and 19.5%, respectively.

In contrast, Bournemouth saw a decline in numbers both year-on-year (-13.9%, Q1 2025 – 1,673) and during the first quarter of the year (-20.1%, Q1 2025 – 1,673). As did Swindon (-2.4% YoY, -13.3% QoQ, Q1 2025 – 916) and Exeter (-3.7% YoY, -17.6% QoQ, Q1 2025 – 733)

Nationally, the latest Red Flag Alert research for Q1 2025 recorded 579,276 businesses in significant distress – an 11.5% decrease on the final quarter of 2024, yet still a 4.5% increase year-on-year. In addition, the number of critically distressed businesses fell 3.1% to 45,416 in Q1 2025, however, this was still an increase of 13.0% year-on-year.

Paul Wood, partner at Begbies Traynor, says: “There is some progress in these figures and adds to economic readings of steady, if unexpected, positivity across the UK. The bounce back in distress figures from the start of the year also demonstrates the resilience of businesses in Bristol and the wider region.

“However, with tariffs, taxes and various other challenges weighing down on businesses – especially in sectors like construction, retail and property – there will remain caution from business leaders across the region and there will be administrations and liquidations in the future.

“In this climate, businesses should be looking at their past, present and future income streams and getting help at the first signs of distress. Where are they spending their money and what challenges or windfalls are on the horizon that they can plan for? For businesses – small and large – that manage to push through these headwinds there may be opportunities uncovered as brighter skies emerge.”