A third of UK bars and restaurants are in 'critical' financial distress according to a report by a top business recovery firm.
The latest "Red Flag Alert" report from Begbies Traynor shows thousands of UK businesses are struggling as the economy heads towards major tariffs and tax regime changes.
Julie Palmer, partner at Begbies Traynor said bars and restaurants have seen a 31.2% year-on-year increase in critical distress and are "bracing themselves for further economic fallout from both domestic tax increases and US tariffs which could push many over the edge.
"Optimism remains in short supply" as "every business in the UK will have their eyes fixed on the impact of US tariffs as consumer-facing establishments are continuing to struggle," she continued.
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 it will offer more challenges.
"Whilst the number of critically distressed businesses did fall in the first quarter of 2025, it feels like this could be the calm before the storm as uncertainty around US tariffs are likely to impact growth and suppress profitability for some time. Businesses will be watching trade talks closely.
"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."
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Companies reporting today
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