'The figures offer some encouragement': Yorkshire’s critical business distress falls by 16 per cent
The number of Yorkshire businesses experiencing critical financial distress has fallen in the past year, although the number facing less severe, early-stage distress has edged up, according to a new study.
The latest Red Flag Alert research from financial and real estate advisory group BTG shows that 3,007 businesses in Yorkshire were experiencing critical financial distress at the end of September 2026, down 16.2 per cent on the same point last year. The decrease was in line with a more pronounced 20.7 per cent UK-wide fall, with critical distress affecting 44,033 businesses nationally.
The number of Yorkshire businesses experiencing ‘significant’ or early-stage financial distress increased by 1.7 per cent year on year to 49,495. The regional picture broadly mirrored the national increase of 1.6 per cent, which brought the UK total to 738,144 businesses.
A spokesman said: “However, the latest figures suggest that the growth in significant distress has slowed considerably. The year-on-year increase in Yorkshire was 11.1 per cent in Q3 (third quarter) 2025 and 33.5 per cent in Q3 (third quarter) 2024, compared with just 1.7 per cent in the third quarter of this year.
“The sector picture remains mixed. Twelve of the 22 sectors monitored in Yorkshire recorded a fall in significant distress year on year, led by utilities (-30.0 per cent), manufacturing (-17.8 per cent), wholesale (-17.1 per cent) and hotels and accommodation (-16.2 per cent).
“Of the 10 sectors where significant distress increased, the largest rises were in real estate and property services (+11.4 per cent), professional services (+9.7 per cent), bars and restaurants (+8.2 per cent) and support services (+5.7 per cent).”
The picture was more positive for critical distress, which fell in 20 of the 22 sectors, according to the survey. Among the sectors experiencing the largest decreases were food and beverages (-42.1 per cent), telecommunications and information technology (-40.5 per cent), media (-37.0 per cent) and financial services (-34.7 per cent). Construction, often seen as a bellwether sector for the wider economy, recorded a 15.9 per cent yearly drop in critical distress.
Travel and tourism, and bars and restaurants, were the only sectors to see an increase in critical distress, up 110.0 per cent, and 12.8 per cent respectively.
Julian Pitts, BTG’s Leeds-based national managing partner for restructuring, said: “The latest figures offer some encouragement, with a significant fall in the number of Yorkshire businesses experiencing critical financial distress and a much slower rate of growth in early-stage distress than we saw in recent years.
“However, the figures should be treated with some caution. More than 40,000 businesses in the region are still experiencing significant financial distress, and the picture varies considerably between sectors.
“Businesses continue to face pressure from employment and operating costs, subdued demand and uncertainty ahead of this month’s Budget. For some, these pressures will continue to constrain investment and growth, even if they have not reached a critical point.”
BTG Red Flag Alert has monitored early and critical distress levels among UK businesses for more than 20 years, using a range of legal, financial and trading indicators.