‘Red flag’ alert as 45,000 businesses across UK on brink of COLLAPSE, shows worrying report after tariff & tax hikes
TENS of thousands of businesses across the UK are on the brink of collapse a worrying report reveals.
Shocking new findings reveal how businesses are struggling as the economy heads toward major tariff and tax hikes.
The 'Red Flag Alert' report from has provided a snapshot of British corporate health for nearly two decades.
As of 31 March this year, 45,416 businesses were found to be in "critical" financial distress, according to the latest report released on April 25.
This is a 13.1 per cent rise versus Q1 2024, despite a 3.1 per cent fall during the first quarter of 2025.
In the context of business finances, "critical distress" represents a severely negative financial situation where insolvency is highly likely in the near future.
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Red Flag Alert monitors 22 sectors, nearly two-thirds of which experienced a double-digit percentage increase of companies in 'critical' financial distress in the last 12 months.
The high street is bearing the brunt of the crisis as the picture is most concerning in the UK's consumer-facing economy.
The number of businesses in distress skyrocketed across Bars and Restaurants, with an increase of 31.2 per cent, and Travel and Tourism which saw a 25.5 per cent increase.
The General Retailers sector also saw a rise of 12.4% per cent.
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But more importantly, the Real Estate & Property Services, Construction, and General Retailers sectors, which comprise the three bellwether sectors in the UK, represented more than a third of companies in 'critical' financial distress.
This represents over 16,000 companies, highlighting the perilous situation for the UK economy.
The levels of "significant" distress also rose by 4.5 per cent in the last twelve months despite a 11.5 per cent decrease during the first quarter of this year.
The Hotels and Accommodation, Real Estate and Property Services and Leisure and Cultural Activities sectors saw the highest increase in "significant" distress since the first quarter of 2024.
But it's the Support Services, Construction, and Real Estate and Property Services sectors where this "significant" distress is most pronounced affecting over 241,000 companies.
Ric Traynor, Executive Chairman of Begbies Traynor, said: "After a year characterised by weakening consumer confidence and the spectre of a higher tax burden, 2025 looks like will offer more challenges."
Which retailers have gone bust in 2025?
DURING 2024, 34 retailers of all sizes went bust, affecting 7,537 shops and 55,914 employees, according to the Centre for Retail Research.
Here, we explain some of the biggest retailers that have entered administration in 2025 so far.
Winifields Outdoors
The camping and outdoor activities retailer based in Lancashire has gone into administration.
While it continues as an online retailer, it is closing six of its seven stores.
Their sales fell owing to the pandemic and changes in consumer buying patterns.
In The Style
Once valued at £100m, the e-commerce fashion retailer has gone into administration after being founded in 2013.
However, it was saved after being bought out by Alps Sourcing Limited, saving over 80 jobs.
Select Fashion
The business has gone into administration for a second time and first went into administration in 2019 when it ran 169 stores.
The retailer hired re-structuring agent Moorfields who have been asked to liquidate the business.
MaxiDeals
The discount convenience chain of 24 stores went into liquidation suddenly in mid-February.
Rising costs and a "really tough trading environment", in addition to their debts, were highlighted by directors as to why they entered voluntary liquidation.
Oddies Bakery
With 13 shops, Oddies Bakery is selling off all its assets (from vans to preparation tables) after failing to find a buyer.
The family owned business has traded since 1905 and all of its sites have closed with 100 staff being made redundant.
Its struggles were attributed to the Covid pandemic followed by an economic downturn although the owners haven't ruled out re-opening some stores in the future.
Quiz Clothing:
The fast fashion chain entered administration in February and 23 stores are set to be closed and 200 of their staff made redundant.
Orion Retail will acquire the remaining assets and the right to operate 42 outlets previously run by Quiz who previously had 62 stores and 1,500 employees.
Beales Department Store, Poole:
First established in Bournemouth in 1881, it is one of the UK's oldest department stores.
It decided to branch out by previously buying several ex-Cooperative department stores in different parts of the country to create a chain.
Eventually it was forced to close and went into administration in 2020, closing 22 of its 23 stores.
Now, due to the extra levies on businesses in the form of NIC changes and an increased minimum wage, the last store has now closed.
Update on Homebase:
The DIY chain collapsed in November after years of struggle and had around 130 shops across the UK.
Five Homebase branches have been acquired by B&Q in January and will be converted to B&Q stores.
This includes the transfer of staff.
While the number of businesses in critical distress did fall in the first quarter of this year, Traynor said this could be the "calm before the storm" ahead of the uncertainty around US tariffs.
He added: "Additionally, the recent increases to both employers' national insurance contributions and the national minimum wage is likely to result in increased distress levels later in the year as many marginal businesses struggle to absorb further cost inflation.
"Ultimately, if the current pressures on businesses do not ease over the next 12 months, Red Flag Alert's data points to a large number of these critically distressed businesses progressing towards formal insolvency."
Partner at Begbies Traynor, Julie Palmer, admitted that "optimism remains in short supply for UK businesses".
Palmer acknowledged the consumer-facing sectors of the economy were "clearly continuing to struggle" as they operate on notoriously tight margins.
However, she added there is a "small window of opportunity for business leaders who stand at the crossroads and must decide which path to take".
She said: "Restructuring, refinancing, selling or closing will be options many will have to decide between, so navigating towards the right outcome will be the target for 2025.
"Sadly, I fear there will be many potholes that cannot be avoided later this year which will prove too much for some."
Why are UK high streets struggling?
Since the pandemic, retailers have been feeling the squeeze with shoppers cutting back on spending due to the soaring cost of living crisis.
High energy costs and a move to online shopping after the pandemic are also taking a toll with many high street shops struggling to keep going.
However, additional costs have added further pain to an already struggling sector.
The British Retail Consortium has predicted that the Treasury's hike to employer NICs from April will cost the retail sector £2.3billion.
At the same time, the minimum wage rose to £12.21 an hour from April, and the minimum wage for people aged 18-20 will rise to £10 an hour, an increase of £1.40.
Experts have said small high street shops could face a particularly challenging 2025 because of Budget tax and wage changes.
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Professor Bamfield has warned of a bleak outlook for 2025, predicting that as many as 202,000 jobs could be lost in the sector.
"By increasing both the costs of running stores and the costs on each consumer's household it is highly likely that we will see retail job losses eclipse the height of the pandemic in 2020."