The number of UK retailers facing a “critical” financial crisis rose by more than 25 per cent in the final quarter of 2024, a new report from the UK’s largest insolvency resolution firm Begbies Traynor revealed on Friday.
The findings highlight growing pressure on the sector as businesses struggle with weak consumer confidence, rising costs and difficult trading conditions.
In the first 11 weeks of October-December, there were 2,124 retailers in “critical financial distress.” This is sharply higher than the 1,696 retailers in distress in July-September.
Whilst the figures are slightly lower than the 2,142 cases reported in the final quarter of 2023, they highlight the continuing challenges facing the sector.
Julie Palmer, partner at Begbies Traynor, attributes the rise in the number of financial difficulties to a combination of factors including rising operating costs and reduced purchasing power. She said:
“The weaker-than-expected retail sales performance in November, traditionally a critical month for the sector, further underscores the tough trading conditions. Clearly, some retailers have found ways to manage financial pressures effectively, but others, particularly in general retail, are struggling under the weight of rising operational costs and squeezed consumer spending.”
Meanwhile, the Bank of England recently expressed concern about the weakening UK economy as several measures of near-term activity have fallen in recent weeks.
It emphasised that GDP growth in the final months of the year is expected to be weaker than previously forecast in the November monetary policy report. Bank officials have adjusted their forecasts downwards to reflect growing economic concerns.
