The Business Distress Index for Q3 2024 (July to September) from Real Business Rescue, corporate insolvency and business rescue specialists, reveals that London has the highest number of businesses in financial distress. This period was marked by volatility due to Labour’s election win in early July and the upcoming Autumn Budget. This led to a decrease in spending and major financial decisions as everyone awaited Labour’s fiscal statement. The Autumn Budget hinted at a tax shake-up to address legacy debt and fund public services, which further dampened investor appetite and consumer spending.
Chris Bristow, an expert at Real Business Rescue, analyzed the latest UK insolvency statistics for Q3 2024. The research shows that 632,756 UK businesses were in significant financial distress during this period, a 5% increase from the previous quarter and 32.3% higher than in Q3 2023. London had 185,494 businesses in significant financial distress, a 35% increase from the previous year.
The top five sectors in significant financial distress include support services, construction, real estate and property, professional services, and general retailers. Retail businesses saw the highest percentage increase, facing challenges such as rising energy bills, high inflation, pricing pressures, and anticipation of tax reforms in the Autumn Budget.
As consumers adjust their spending habits, retailers must adapt to the changing landscape by embracing digitalization and offering omnichannel experiences. Despite the financial distress faced by businesses in London and across the UK, retail volumes are expected to increase as we enter Q4, traditionally a profitable time for UK retailers. The Golden Quarter is approaching, presenting an opportunity for retailers to boost their sales and recover from the challenges of the previous quarter.
