LONDON
The number of UK retailers facing "critical" financial distress has surged by over 25% in the final quarter of 2024, according to a new report by the UK’s largest insolvency practitioner, Begbies Traynor.
The findings underscore the mounting pressures on the sector as businesses grapple with subdued consumer confidence, rising costs, and challenging trading conditions.
In the first 11 weeks of the October-December period, 2,124 retailers were recorded in "critical financial distress."
This marks a sharp increase from the 1,696 distressed retailers in the July-September quarter.
While slightly lower than the 2,142 cases reported in the final quarter of 2023, the figures highlight the persistent challenges facing the sector.
Julie Palmer, a partner at Begbies Traynor, attributes the rise in financial difficulties to a combination of factors, including escalating operational costs and reduced consumer spending power.
"The weaker-than-expected retail sales performance in November, traditionally a critical month for the sector, further underscores the tough trading conditions," Palmer explained.
"Clearly, some retailers have found ways to manage financial pressures effectively, but others, particularly in general retail, are struggling under the weight of rising operational costs and squeezed consumer spending," she added.
Meanwhile, the Bank of England has recently raised concerns about a weakening UK economy, as several indicators of near-term activity have declined in recent weeks.
It highlighted that GDP growth in the final months of the year is expected to be softer than previously projected in the November Monetary Policy Report. Bank staff have adjusted their forecasts downward, reflecting mounting economic challenges.
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