Brexit latest: Number of UK firms in critical financial distress soars 17%

Property sector hit hardest, followed by financial services, leisure and culture, research finds

The number of UK businesses in “critical” financial distress jumped 17 per cent over the year to the end of March, with a significant deterioration seen in the first quarter of 2019 as Brexit uncertainty deepened.

Research by insolvency firm Begbies Traynor found that almost half a million businesses – one in seven of all UK companies – were in significant financial distress in the first three months of 2019.

The number of significantly distressed companies in the property sector jumped by 13 per cent to 48,182 for the quarter, from 42,512 in the same period a year ago.

Property was the worst-hit sector for the second quarter in a row, and was hurt by people holding off making big purchases including new homes.

House prices fell in England for the first time since 2012 in the three months to March 2019, dragged down by London and the southeast.

Brexit has been keeping people from entering the market, according to estate agents, while increased taxes on buy-to-let investments have continued to dampen demand.

Julie Palmer, partner at Begbies Traynor, said: “Many UK businesses are currently in limbo and deferring major investment decisions.

“This, combined with consumers holding back on big-ticket purchases, has resulted in increasing significant distress across many sectors.”

Companies involved in buying, selling and letting properties took the biggest hit, with a 16 per cent rise in the number in significant distress.

The construction sector saw a 10 per cent rise to 13,018, while the financial services, leisure and culture industries also suffered.

A series of well-known companies, including Debenhams and House of Fraser, have recently gone into administration.

Meanwhile, business investment fell for a fourth consecutive quarter in the final three months of 2018 – the first time this has happened since the economic downturn of 2008-09.