Market News

By Giulia Morpurgo

(Bloomberg) -- The number of UK retailers facing critical financial distress has soared in the fourth quarter amid rising costs and falling consumer confidence.

There were 2,124 retailers in distress in the period between Oct. 1 to Dec. 16, a 25% quarter-on-quarter jump, according to a report by insolvency and restructuring practitioners Begbies Traynor published on Friday. 

The jump in the number of troubled retailers was likely determined by a surge in costs and coincides with the approval of the Autumn Budget, which is set to increase expenses for employers, according to Begbies Traynor. Weaker-than-expected sales in November also impacted retailers, as consumers held off on spending money in a crucial month for sales.

The tally, however, was 0.84% lower compared to the same period in 2023.

“This year has highlighted the resilience and adaptability of some UK retailers, but the sector remains under significant strain,” said Julie Palmer, a partner at the firm. “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.”