LONDON — More than 53,000 UK businesses are now facing critical financial distress, highlighting growing pressure on companies from high costs, weaker consumer spending and economic uncertainty.

Research from Begbies Traynor Group found that the number of companies in critical financial distress increased by 9% year on year to 53,756 during the second quarter of 2026.

Hotels and leisure businesses have been particularly affected, with financial distress rising sharply across both sectors.

The figures underline the difficult trading environment facing Britain's business community.

Companies are continuing to deal with elevated energy bills, wage costs and other operating expenses, while consumers remain cautious about discretionary spending.

Leisure and cultural businesses recorded a 27.1% increase in critical financial distress, while hotels saw a 26.6% rise.

Small businesses are particularly exposed because they often have less financial capacity to absorb sudden increases in costs.

The latest figures also come as UK retail sales fell 0.5% in July, adding to concerns about consumer demand.

At the same time, the wider services economy is showing resilience, with August services activity reaching a six-month high.

The contrasting signals suggest that Britain's economy is recovering unevenly, with some businesses benefiting from stronger activity while others remain under severe financial strain.

Business groups and policymakers will now be watching closely to see whether improving economic activity can reduce insolvency risks during the remainder of 2026.