Financial distress continues annual rise for North West businesses as year reaches halfway point
The number of North West businesses in ‘critical’ financial distress increased by 18.6% year-on-year to 6,250 in Q2 2026 compared Q2 2025 according to BTG’s latest Red Flag Alert, which has monitored the financial health of UK companies for over two decades.
Analysis of the financial and real estate advisory group’s research reveals this is the third largest annual increase in ‘critical’ financial distress of the 11 regions monitored, and is above the UK average (+9.0% YoY, Q2 2026 – 53,756).
This latest Red Flag Alert indicator of business distress sits against a backdrop of macroeconomic uncertainty and increased operational, employment, tax and supply chain costs. As businesses continue to acclimatise to these challenging market conditions, BTG’s data suggests that UK firms are struggling with their financial health as we enter the second half of 2026.
The latest Red Flag Alert also reported 72,079 businesses in the North West were in ‘significant’ financial distress in Q2 2026, a 3.6% year-on-year increase.
At a country level, Greater Manchester (+2.4% YoY, Q2 2026 – 31,502) saw an annual increase in ‘significant’ financial distress, while Merseyside (-2.4% YoY, Q2 2026 – 7,273), Lancashire (-0.1% YoY, Q2 2026 – 13,371), Cheshire (-4.6% YoY, Q2 2026 – 14,630) and Cumbria (-6.1% YoY, Q2 2026 – 1,636) registered year-on-year decreases.
The sectors with the most North West businesses in ‘significant’ financial distress were Support Services (+4.3% YoY, Q2 2026 – 11,405), Construction (-1.1% YoY, Q2 2026 – 10,489) and Real Estate and Property (+13.1%, Q2 2026 – 9,419).
Across the UK, the number of businesses in ‘critical’ financial distress saw a 9.0% year-on-year to 53,756, while the number in ‘significant’ financial distress increased 1.0% year-on-year to 674,030.
Paul Barber, Partner at BTG who serves the North West, including Lancashire, said:
“As we move into the second half of 2026, there appears to be hope and a bit of optimism that the economic landscape could improve, yet businesses across Lancashire continue to trade through demanding conditions. Persistent financial pressure, elevated costs, and subdued consumer spending are making it increasingly difficult for businesses to absorb another shock. With fuel and utility costs rising yet again recently.
“Consumer-facing businesses remain particularly exposed, as households continue to feel the impact of higher living costs, and businesses contend with rising overheads. While some sectors benefited from stronger seasonal demand, underlying pressures continue to weigh on businesses across Lancashire.
“As businesses countdown to see what the new government may do to improve consumer confidence and encourage investment, they cannot afford to put decisions on hold. Businesses that identify problems early, take a close look at their cost base, and focus on improving efficiency will give themselves a greater chance to withstand pressure.”
