Bar and restaurant sector is the UK's most distressed

The number of businesses in the sector that were said to be experiencing either “significant” or “critical” financial problems increased from 7,839 in Q3 to 11,600 in Q4, a rise of 48%.

The wider leisure sector saw a steep rise, up 30% 5,092. There were also increases for food retailing (up 30% to 2,525) and hotels (up 21% to 2,571).

It came despite a 12% decrease in distress across all industries, with 196,636 cases in Q4 against 223,125 in Q3.
Begbies Traynor warned of the emergence of a “twin-track economy”, with consumer-facing industries struggling while others such as construction and real estate show clear improvement; business distress among these industries fell 34% and 57% respectively.

Julie Palmer, deputy regional managing partner at Begbies Traynor, said: “The substantial increases in financial distress in these key consumer-facing sectors demonstrate the sheer scale of the challenges facing the consumer economy, particularly as these rises come at a time when spending in the run up to Christmas should have provided a welcome boost to many of these businesses.

“It is clear that these businesses are feeling the effects of the constraints on discretionary consumer spending brought about by years of wage rises not keeping pace with the rate of inflation and households reducing debt, where possible.

"Unfortunately, this year will offer no respite for family budgets as changes to the child benefit allowance, rising utility bills, travel fares and other costs, and continued weak growth in real pay rates can only be expected to drain more cash away from these sectors.”