The number of businesses in Yorkshire experiencing ‘significant’ or early-stage financial distress ticked over to reach more than 50,000 companies (50,201) in Q4 2025, up 3.1% on the previous quarter and 10% on the same three months in 2024, according to the latest Red Flag Alert research from financial and real estate advisory group Begbies Traynor.

The data, part of the latest quarterly snapshot of the UK’s corporate health, highlights a slowdown in the rate at which business distress is increasing, both in Yorkshire and across the UK. The number of Yorkshire companies in financial difficulty grew by 6.2% between Q2 and Q3 of last year but by only 3.1% between the third and fourth quarters.

Nationally, UK businesses experienced a rise of just 0.3% in early-stage distress since the previous quarter, and a year-on-year increase of 11.3%, with a total 728,640 firms affected.

In Yorkshire, six out of the 22 industry sectors tracked saw a drop in levels of significant distress in Q4 2025 compared with the previous quarter. They included wholesale (-5.2%, 1,237 businesses affected), telecoms and IT (-4.2%, 2,505 businesses affected) and the support services sector, which includes a wide range of businesses from funeral providers to hairdressers (-2.6%, 6,531 businesses affected).

Among sectors faring less well in Yorkshire, where distress levels had risen since the previous quarter, were health and education, which includes care homes, nurseries and all educational institutions, (+16.6%, 3,887 businesses affected). The leisure and cultural activities sector, which includes museums and galleries, performing arts and gambling firms, also saw one of the highest rates of increase in financial problems (+13.7%, 1,227 businesses affected).

Additionally, 4,579 businesses were experiencing advanced or ‘critical’ distress across Yorkshire, up 27.6% on the previous quarter and 43.5% on Q4 2024.

Julian Pitts, Begbies Traynor’s Leeds-based national managing partner for restructuring, said: “We are beginning to see tentative signs that the increase in early-stage financial distress may be stabilising, which aligns with other recent positive indicators in the wider economy, such as November’s unexpected return to growth, with GDP up 0.3%.

“However, this must be balanced against the rapid rise in more serious and advanced distress, which is extremely concerning and could translate into higher levels of insolvency over the coming months.

“Businesses in Yorkshire and across the UK are still contending with reduced consumer demand, persistent cost pressures and high interest rates. For those facing mounting financial issues, early engagement and professional advice remain critical.”

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.