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The variety of UK companies in “critical financial distress” has risen by greater than a 3rd over the previous yr, in response to a brand new report, with bars and eating places, retailers and building teams the toughest hit.

According to the “red flag alert” report launched on Friday by insolvency specialist Begbies Traynor, 1,957 UK companies had been in crucial financial misery within the second quarter of 2022, up 37 per cent from the identical quarter final yr.

The report mentioned that larger labour, materials and power costs, in addition to the withdrawal of government-backed Covid assist programmes, had been responsible for the elevated pressure on companies.

Bars and eating places, normal retailers and building firms had been essentially the most affected, with year-on-year rises of 70 per cent, 48 per cent and 36 per cent respectively, the report discovered.

“Having emerged from the pandemic, many companies were hoping for an economic boom but that has simply fizzled out, as supply chain issues and the invasion of Ukraine have taken their toll by driving up raw material and energy costs,” mentioned Julie Palmer, associate at Begbies Traynor.

There had been additionally excessive ranges of misery within the assist providers, actual property, automotive and manufacturing sectors.

The report comes a day after the Bank of England warned that Britain confronted a protracted recession, with inflation anticipated to hit 13 per cent by the top of the yr.

Corporate insolvencies in England and Wales additionally rose within the second quarter, in response to official knowledge printed this week.

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