Number of British firms in 'significant distress' hits a two-decade high on the eve of a bruising Labour Budget

From the Newshound archive · first published 27 October 2026.

A record 738,144 UK businesses are now in 'significant financial distress' — the highest figure since BTG began its 'red flag' report in 2004 — with 20 of 22 monitored sectors deteriorating in the third quarter. Chancellor John Healey delivers his first Budget tomorrow against a backdrop of oil at $116 a barrel, rising borrowing costs and warnings that energy bills could climb by nearly £500 to around £2,200 in January.

Construction and real estate are among the worst hit, with 108,340 and nearly 100,000 firms in distress respectively.

Bars and restaurants saw distress jump 5%, while distress among food and drug retailers in difficulty climbed more than 7% — just weeks before the critical Christmas trading period.

British businesses still owe £27.3bn in unpaid VAT, corporation tax and PAYE arrears to HMRC, figures obtained by BTG through a freedom of information request reveal.