THERE are now 650 Taunton companies in ‘significant’ economic distress, an increase of 37% on last year, analysis reveals.

The latest figures monitoring the financial health of UK companies, from Begbies Traynor’s Red Flag Alert, found that weakness in consumer confidence, plus ongoing economic concerns, had put considerable pressure on businesses across the town.

Now 650 companies are "at risk of economic failure", which is a quarterly increase of 8%, and an annual rise of 36.6%.

Construction businesses were the most affected, while the support services sector including legal and consulting services saw a major increase in significant distress.

There are 104 construction businesses in significant distress in Taunton – a 42.5% increase on last year, making it the most troubled sector in the town.

There has also been a significant increase in the number of support services businesses facing difficulties, with this industry seeing an annual increase of 23.4%.  

Nationally, the latest Red Flag Alert research for the second quarter of 2024 recorded 601,950 businesses in significant distress, which is 36.9% higher than the same period in 2023.

During the second quarter of this year, critical financial distress also increased by 34.5% year-on-year to 40,613 companies, with a large number expected to enter insolvency over the next 12 months.

This is being driven by notable increases in distress in sectors such as automotive, transportation, logistics, and bars and restaurants.

Commenting on the figures, Neil Vinnicombe, partner at Begbies Traynor in Taunton, says: “It looks like 2024 will prove to be another tough year for businesses.

"We are a little over halfway through the year and the macro-economic environment remains extremely testing, with the latest Red Flag Alert data highlighting a substantial increase in the number of businesses in significant financial distress in comparison to this time last year.

“A continuation of falling inflation levels will be especially helpful for businesses, particularly if interest rates begin to inch backwards later this year.

“Beyond these small glimmers of hope, all eyes are now on our new Government as we ask ourselves what they can do to kickstart economic growth in the UK.

"However, the reality is that the Government may not be able to act fast enough to stop many struggling businesses from succumbing to the economic pressures with which they are currently grappling. 

“In short, the prevailing economic situation means that we still expect to see heightened levels of company insolvencies extend into 2025 and beyond.”