The number of businesses in Yorkshire experiencing ‘critical’ financial distress was 7.9% higher than at the same point last year according to the latest Red Flag Alert research from financial and real estate advisory group BTG.

According to the Red Flag Alert data, published this week a total of 3,696 companies in Yorkshire were in critical financial distress as of 30 June 2026. The year-on-year increase in the region was slightly lower than the UK-wide rise of 9%.

Levels of less serious ‘significant’ or early-stage financial distress in Yorkshire were marginally lower than the same period in 2025, down 0.4%, with 45,645 businesses affected. Nationally, significant financial distress increased by 1.1% on the previous year.

The sector picture across Yorkshire was mixed, with 14 of the 22 sectors seeing a reduction in significant financial distress year on year. The largest annual decreases were recorded in utilities (-23.3%), hotels and accommodation (-13.1%), wholesale (-13.1%) and printing and packaging (-13.0%).

The sectors recording the largest year-on-year increases were real estate and property services (+9.3%), leisure and cultural activities (+4.8%), automotive (+4.6%) and manufacturing (+2.7%).

Julian Pitts, BTG’s Leeds-based national managing partner for restructuring, said:
“The worrying underlying trend shows a nearly 8 percent increase in critical financial distress levels in Yorkshire year on year.

“The very slight drop in the early-stage or ‘significant’ distress in our region, compared to Q2 2025, paints a mixed picture and many businesses are still under considerable pressure from rising costs, energy and fuel prices, and wider economic uncertainty.

“Businesses may be holding their breath before making major decisions on investment and expansion, as they wait for greater clarity on the direction of the economy and the impact of Andy Burnham’s appointment as Prime Minister.

“While that cautious approach can help preserve cash and provide some short-term resilience, it can also mean that businesses delay making decisions that could support future growth."

He added: “Businesses that continue to monitor their financial position closely and act early when problems emerge will be best placed to navigate the uncertainty ahead. Early advice can make a substantial difference in helping businesses identify options and avoid a situation becoming critical.”

BTG Red Flag Alert has monitored early and critical distress levels among UK businesses for over 20 years, using a range of legal, financial and trading indicators.