More firms will follow Homebase into administration as Budget measures take effect, insolvency expert warns
A warning has been given by a partner at insolvency specialist Begbies Traynor, after the firm’s latest Red Flag Alert report found 2,124 UK retailers were in critical financial distress between October and December 16.
This was 25 per cent higher than in the previous three months, between July and September, although marked a slight decline of nearly 1 per cent compared with the same period a year ago.
Advertisement
Hide AdAdvertisement
Hide AdThe latest figures include a 29 per cent quarter-on-quarter surge in the number of general retailers on the brink of collapse, and a 17 per cent jump among food and drug retailers.


Online sellers, takeaway food shops and mobile food stands, and convenience shops were among the businesses struggling the most.
Homebase was one of the household names to announce it had called in administrators last month, after being hit hard by an “incredibly challenging” three years for the DIY sector.
Julie Palmer, a partner at Begbies Traynor, said this poorer performance in “traditionally a critical month for the sector, further underscores the tough trading conditions, as consumers hold off on purchases amid low confidence and rising prices”.
Advertisement
Hide AdAdvertisement
Hide Ad“Adding to this uncertainty, the measures announced in the autumn Budget, including the planned increase to employers’ national insurance contributions, will significantly dial up the challenges faced by these businesses,” she added.
“These changes, alongside increases to the minimum wage, will negatively impact cash flow and, consequently, we expect elevated insolvency levels across this sector during 2025.”
Ms Palmer said that the marginal year-on-year decline in the number of retailers facing critical distress provided a “glimmer of home” with some businesses finding ways to adapt to financial pressures and changing shopping behaviours.
But she said others were more “vulnerable” to online competitors such as Temu and Shein, which have drawn in swathes of shoppers attracted to low-cost fast-fashion.
Advertisement
Hide AdAdvertisement
Hide AdMeanwhile, a total of 28,747 retail businesses in the UK were also in significant financial distress over the latest quarter, dropping from 34,494 over the same period last year.
Ms Palmer said: “This year has highlighted the resilience and adaptability of some UK retailers, but the sector remains under significant strain.
“Clearly, some retailers have found ways to manage financial pressures effectively, but others, particularly in general retail, are struggling under the weight of rising operational costs and squeezed consumer spending.”
Comment Guidelines
National World encourages reader discussion on our stories. User feedback, insights and back-and-forth exchanges add a rich layer of context to reporting. Please review our Community Guidelines before commenting.