More than 53,000 UK businesses are now facing critical financial distress, highlighting growing pressure on companies as costs remain high and consumer confidence remains fragile.

The latest Red Flag report recorded 53,756 businesses in critical financial distress during the second quarter of 2026, a 9% increase compared with the same period last year.

The biggest increases were reported across consumer-facing industries, including leisure, culture, hotels and health clubs. Some sectors recorded double-digit annual increases in the number of financially distressed companies.

The figures also show that a much larger group of 674,030 UK businesses are experiencing significant financial distress, suggesting that financial pressure extends well beyond companies already facing immediate collapse risks.

London has the highest number of businesses experiencing financial difficulties, while winding-up petitions have also increased. The report says HMRC is owed billions of pounds in overdue business taxes.

The latest figures will increase concerns about the resilience of UK companies ahead of the government's autumn economic decisions, particularly as businesses continue to face labour, energy and operating-cost pressures.