It is concerning that there has been a record increase in the number of UK businesses in critical financial distress.  The general definition of critical financial distress is if a business has an outstanding county court judgment of more than £5,000 or faces a winding up petition.  This record jump was by a shocking 50% from September to December last year, which took the number of UK businesses in this category to 46,583.

The quarter-on-quarter increase was driven in financial distress was most acute in service industries, including Hotels & Accommodation (+83.6%), Leisure & Cultural Activities (+76.5%), General Retailers (+47.6%) and Food & Drug Retailers (+37.4%). 

Below that definition, sits one of significant financial distress.  This is when a company cannot generate sufficient revenues or income, making it unable to meet or pay its financial obligations.  This is generally due to high fixed costs, a large degree of illiquid assets, or revenues sensitive to economic downturns.  Sadly, since Labour came to power last July, we are seeing a growing number of businesses suffering significant financial distress.  This number is shockingly high at 654,765, up by over 22,000 from the previous quarter. 

While global conditions have been tough ever since the start of this decade when Covid hit, the current downturn and plummeting of both business and consumer confidence is very much the fault of the current Labour Government.  Their cabinet has no experience of working in business, and they don’t understand that squeezing the private sector too hard has negative consequences for everyone.  Business is not the easy cash cow Labour think it is.

As we enter February, we will only be two months away from the implementation of Labour’s Employers National Insurance hike that will hit business and employment hard. It will also hit the public sector, with it costing Crawley Borough Council over half a million pounds, meaning that major service cuts are being proposed, including to the neighbourhood maintenance teams.

Keir Starmer and Rachel Reeves need to urgently change course on their economic policies, because the economic decline they are causing is about to get much worse. 

Councillor Duncan Crow, Leader of Crawley Borough Council Conservative Group

29th January 2025