Almost 49,000 businesses in Yorkshire experienced ‘significant’ or early-stage financial distress in Q3 2025, up 6.2% on the previous quarter and 11.1% on the same three months in 2024, according to the latest Red Flag Alert research from leading independent business rescue and recovery specialist Begbies Traynor.
The latest figures, from the quarterly snapshot of the UK’s corporate health, highlight that the continued increase in number of businesses in distress slowed to 6.2% in the third quarter of the year after a 14.5% increase during the first half 2025 across Yorkshire.
The Red Flag Alert data reveals that, nationally, UK businesses saw a 14.8% rise in early-stage distress year-on-year and a 9% increase compared with Q2 2025, representing almost 726,600 businesses in financial difficulties.
In Yorkshire, half of the 22 industry sectors tracked displayed double-digit increases in significant distress since the previous quarter. Construction continued to be the sector with the largest number of distressed businesses, affecting 7,669 Yorkshire firms, although this had fallen by 1.8% since the previous quarter.
Among the worst affected were printing and packaging (+35.8%, 167 businesses affected) and manufacturers (+32%, 1,746 businesses affected), as well as financial services (+24.1%, 1,343 businesses affected) and travel and tourism (+22%, 200 businesses affected).
One of the best-performing industry was food and drug retail, which includes supermarkets. Businesses in this sector saw a 1.6% fall in significant distress since Q2 and a 15.5% year-on-year decrease, with 1,483 businesses in financial difficulties.
As well as rising early-stage distress, 3,589 business were experiencing advanced or ‘critical’ distress across Yorkshire, a figure which was up 4.8% on the previous quarter and 71.2% on Q3 2024.
Julian Pitts, Begbies Traynor’s Leeds-based national managing partner for restructuring, said: “While it’s encouraging that the pace of distress has slowed since the last quarter, the overall direction is still upwards and many Yorkshire firms remain under real pressure. Persistent cost inflation, high borrowing costs and weaker demand continue to squeeze margins and cashflow across key sectors.
“Although price pressures have started to cool slightly, inflation is still well above target and interest rates remain at levels that are tough for many businesses to absorb. Until we see a sustained easing in costs and credit conditions, we’re unlikely to see real relief for those on the brink.
“It’s positive to see resilience in areas like food and drug retail, but with critical distress also rising sharply, too many firms are running out of road. The message is clear: act early and get professional advice before problems escalate.”
Begbies Traynor’s Red Flag Alert has monitored early and critical distress levels among UK businesses for nearly 20 years, using a range of legal, financial and trading indicators.
