Distress among UK companies has risen for a third consecutive year, to its highest level since the onset of the COVID-19 pandemic, according to a report by consulting firm Alvarez & Marsal.
A&M found that 11.2% of UK firms suffered from some combination of weak profitability, insufficient liquidity and inadequate capital structure during 2024. The figure stood at 9.8% in 2023 and 8.5% in 2022.
Surging costs and a rapid rise in interest rates in recent years has put significant strain on UK companies.
“While inflation has since abated, interest rates remain comparatively high to the recent past and companies are having to adapt to this new reality, with debt servicing costs draining cashflow,” said Chris Johnston, European co-head of Financial and Operational Restructuring at Alvarez & Marsal.
Photo credit: Hollie Adams/Bloomberg
The report notes that the increase in employer National Å˽ðÁ«´«Ã½Ó³» contributions outlined in the UK’s 2024 Autumn Budget and the increase in the national minimum wage will put further pressure on sectors that are highly reliant on low-income labor, such as construction, hospitality and retail.
A number of high-profile names in the UK are struggling. On March 10, Fitch Ratings downgraded PizzaExpress one notch to CCC+, highlighting concerns over the restaurant chain’s ability to refinance bonds coming due in July next year, uncertainty in the casual dining sector and the increasing cost of labor.
In a February , John Wood Group PLC said that it expected to generate negative free cashflow in 2025. Shares in the engineering and consulting firm have fallen more than 80% since the middle of last year.
The UK is not an outlier in Europe. Companies across the continent are feeling the strain. Germany, Spain, Italy and Switzerland have all experienced increases in distress, according to A&M. Distress among German firms has risen most sharply, more than doubling to 16.6% in 2024 from 8.1% in 2023.
Across Europe, it is fashion retail that is under the greatest stress. Almost one in five European retailers are in distress compared to 13.7% in 2023.
Photograph: A worker stands in view of The Shard in the 22 Bishopsgate building in the City of London, U.K., on Monday, April 26, 2021. Photo credit: Jason Alden/Bloomberg
Topics COVID-19
Was this article valuable?
Here are more articles you may enjoy.
Data Insight: Who’s Growing in Personal Lines? 
AIG Can Continue Trade Secret Theft Allegations Against Dellwood 
NHTSA Probes More Than 2 Million Hondas Over Engine Restarting Concerns 
Fla. House Subcommittees Vote to Repeal PIP Law, Pass Two Other Å˽ðÁ«´«Ã½Ó³» Bills 
