Revealed: More than 4,000 Shropshire firms now in 'significant economic distress'

The figures were revealed in a report from Begbies Traynor’s ‘Red Flag Alert’, which monitors the financial health of UK companies.

Ongoing economic uncertainty, coupled with the impending impact of the tax, national insurance and national minimum wage increases announced in the October Budget, are all contributing to business stress in the county, with 4,346 at risk of economic failure. 

This represents a quarterly increase of 14.9 per cent, and an annual rise of 29.3 per cent.

According to the report, there are 754 construction businesses in significant distress, making it the most troubled sector in Shropshire.

There have also been significant increases in the number of food and drug retailers and sport and health clubs facing difficulties, with the sectors seeing annual increases of 76.5 per cent and 64.2 per cent respectively. 

Mark Malone, partner at Begbies Traynor in the Midlands, said: “Even at this very early stage, the outlook for the rest of 2025 is challenging, and many companies are clearly struggling to adapt to the compounding issues they are facing.

"Unfortunately, there is no easy fix, which will be very unsettling for businesses who are struggling to tread water already.

“For many companies, which were already dealing with rising operational and borrowing costs, the increase in national insurance contributions and the national minimum wage announced at the last UK Budget, could result in further financial strain at a time when confidence is already low.

“So, in the absence of a reduced tax burden and a strong economic recovery, unfortunately it is likely that the number of insolvencies will continue to rise in 2025 as firms struggle to cope with a perfect storm of rising costs, financial instability and fluctuating market conditions.”

Nationally, the latest Red Flag Alert research for Q4 2024 recorded 654,765 businesses in significant distress, which is 21.3 per cent higher than the same period in 2023. In addition, there has been a worrying surge in the number of businesses in the UK entering ‘critical’ financial distress in the final quarter of 2024, rising by 50.2 per cent to 46,853 companies.

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