Manchester-based corporate rescue giant Begbies Traynor Group plc said on Thursday its latest research reveals that the number of UK businesses in “significant” financial distress has increased 40% in the three years since the EU referendum.

Begbies Traynor said the crisis is affecting 489,000 UK businesses with the real estate and property, construction, retail and travel sectors the most severely affected.   

The number of UK businesses in significant distress has risen by 139,000  since the 2016 EU referendum.

“The latest data for Q3 2019 found there were large numbers of UK trading businesses experiencing significant financial distress at the end of September 2019,” said Begbies Traynor.

“Over the past year significant financial distress has increased in 20 out of the 22 sectors monitored by this research, demonstrating that this deteriorating financial performance is affecting a broad spectrum of companies.

“There was also a marked increase in the number of businesses in critical financial distress during the same period – often a precursor to formal insolvency – with a substantial 8% year-on-year rise, a worrying figure compounded by political and economic uncertainty.”

Begbies Traynor Group executive chairman Ric Traynor said: “This is a worrying assessment of the UK economy, with nearly 500,000 businesses now in significant financial distress – almost 150,000 more than three years ago.

“While the latest GDP figures has seen growth of 0.3%, we should not under estimate the extent of the problems on the horizon.

“The broader macro economic environment is a real concern and could ultimately have a much greater impact on UK business than the specific terms of any Brexit deal.

“The growth in protectionist trade policies, combined with faltering consumer demand in both the US and Europe are a real concern.

“Add to this the concerns surrounding China’s debt, which now stands at three times its GDP and we could be in for the perfect economic storm. 

“With productivity falling at home and investment stifled, the UK needs to regain its confidence and start moving forward positively in order to get out of the economic malaise it’s currently finding itself in.”