Begbies Traynor has reported that over 600,000 UK companies are experiencing extreme financial distress.
The latest research has shows that the number of companies facing 'significant' financial strain in the current economic climate has jumped by nearly 10% to 601,950 businesses.
The acceleration in the numbers of companies under pressure is driven significantly by the travel and tourism, hotels and accommodation, and bars and restaurants sectors.
The growth in distress among these sectors reflects the ongoing weakness of consumer confidence in the UK, which is putting a huge amount of pressure on these consumer-facing sectors in the country.
Julie Palmer, partner at Begbies Traynor, said: "It looks like 2024 will prove to be another tough year for UK businesses. Six months in, and we're seeing clear signs that financial distress is growing across almost every sector.
"While a fall in inflation to more palatable levels will likely provide some relief, consumers simply aren't behaving like they used to and these businesses, who are still grappling with higher costs pushed up by higher wages, are really struggling."
The "Red Flag Alert" research from Begbies Traynor also found that companies in 'critical' financial distress had increased by 1.1% to 40,613 companies.
With a large number of businesses facing critical strain and expected to enter insolvency over the next 12 months, the state of construction, real estate, hospitality, financial and support sectors continues to be of concern.
Ric Traynor, executive chairman of Begbies Traynor, commented: "We are a little over halfway through the year and the macro-economic environment for UK companies remains extremely testing.
"The situation for many British firms remains grave, with the latest Red Flag Alert data highlighting a substantial increase in the number of businesses in significant financial distress in comparison to this time last year.
"The prevailing economic situation means that we still expect to see heightened levels of company insolvencies extend into 2025 and beyond."
FTSE 100
The UK's flagship share index, the FTSE 100, was down 16-points at 8,188 shortly after opening this morning.
Brent crude oil futures were up 0.39%, trading at $82.95 a barrel.
Companies reporting today
- Moneysupermarket.com - Half Year results
- Verizon - Q2 Results