Growth in business distress slows across Humber region

Almost 3,000 businesses in the Humber region experienced ‘significant’ or early-stage financial distress in Q3 2025, up just 0.6% on the previous quarter and 12.1% since Q3 2024, according to the latest Red Flag Alert research from leading independent business rescue and recovery specialist Begbies Traynor.

Providing a quarterly snapshot of Britain’s corporate health, the Red Flag Alert data showed that significant distress levels have slowed significantly in the third quarter after having climbed by 23% in the first half of the year across the Humber region.

The Red Flag Alert data reveals that, nationally, UK businesses saw a 14.8% rise in early-stage distress year-on-year and a 9% increase compared with Q2 2025, representing almost 726,600 businesses in financial difficulties.

In the Humber region, almost a third (seven) of the 22 industry sectors tracked displayed decreases in significant distress since the previous quarter. Among the best performing were the wholesale sector (-34.2%, 102 businesses in distress); leisure and culture (-25%, 36 businesses in distress), as well as professional services (-20.7%, 146 businesses in distress) and construction (-15.3%, 500 businesses in distress). Construction also continued to be the sector with the largest number of distressed businesses.

Industries worst hit by significant business distress included manufacturing firms which increased from 60 to 118 businesses whilst Telecoms and IT saw a 24.8% increase, affecting 141 firms.

Andrew Mackenzie, partner at Begbies Traynor Group in the Humber region, said “While it’s encouraging that the pace of distress has slowed since the last quarter, the overall picture remains challenging for many Humber businesses. Persistent cost pressures, high borrowing costs and subdued demand are continuing to squeeze margins and cashflow, particularly in core sectors such as manufacturing and food production.

“Following a brief period of stability, inflation is projected to rise as energy and fuel costs increase. Combined with persistently high interest rates and fragile confidence, this will continue to challenge firms already struggling with tight margins and limited access to finance.

“It’s positive to see improvements in sectors like construction and professional services, but these gains are fragile. The message to business owners is to act early and seek professional advice before financial pressures become unmanageable.”

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