Growth in business distress remains slow in Humber region

Business distress across the Humber region increased only marginally in the final quarter of 2025, with the number of companies experiencing ‘significant’ or early-stage financial difficulty rising by just 1.8% on Q3, to 2,878 firms, according to the latest Red Flag Alert data from leading financial and real estate advisory group BTG. Levels were up 9.4% compared with the same period in 2024.

The figures form part of the group’s quarterly snapshot of UK corporate health and point to a slowdown in the pace at which distress is rising both locally and nationally. Across the Humber, the number of companies in financial difficulty increased by just 2.5% in the second half of 2025.

Nationally, the UK saw a rise of just 0.3% in early-stage distress quarter-on-quarter in Q4 and a 11.3% year-on-year increase, with 728,640 firms affected.

In the Humber region, 10 out of the 22 sectors tracked saw reduced levels of significant distress in Q4 2025 compared with Q3. These included industrial transportation and logistics (-17.4%, 162 businesses affected), bars and restaurants (-12.2%, 101 businesses) and general retail (-11.4%, 164 businesses).

Among sectors recording higher levels of distress than the previous quarter were professional services, which includes accountants, lawyers and architects (+20.6%, 176 businesses), financial services (+16.7%, 49 businesses) and manufacturing (+11%, 131 businesses).

Additionally, 213 businesses were experiencing advanced or ‘critical’ distress across the Humber region, down 1.4% on the previous quarter but up by 12.1% on Q4 2024.

Andrew Mackenzie, partner at BTG in the Humber region, said: “After a long period where distress was climbing quickly, we are now seeing the pace beginning to ease. It’s only a small shift, but it does sit alongside some more positive signs in the wider economy, such as November’s unexpected return to growth, with GDP up 0.3%.

“However, many businesses are still managing high costs, weaker demand and costly finance, and for some the pressure is continuing to build. Those in retail, hospitality and leisure for instance are currently facing the prospect of a sharp, and potentially devastating, reduction in business rates relief from 75 to 40%, on top of concerns such as the hike in employer National Insurance and the increase in the minimum wage that tend to affect small businesses disproportionately.

“We speak to business owners every day who are doing everything they can to keep things moving, and if difficulties are starting to emerge, seeking advice early can make a real difference. There are often more options on the table than people expect, particularly before problems become more serious.”

BTG’s Red Flag Alert has monitored early and critical distress levels among UK companies for 20 years, using a range of legal, financial and trading indicators.