Nearly 46,000 Yorkshire firms are experiencing financial distress as economic pressures intensify.

This figure marks a 14.5 per cent rise from the previous quarter and a 9.5 per cent increase from last year, according to to Begbies Traynor’s Red Flag Alert report.

The study highlights the strain on Yorkshire’s key sectors, with six of the 22 sectors showing a double-digit yearly increase in early distress.

Real estate and property services, professional services, support services, and hotels are among the hardest hit.

Despite this, some sectors have shown resilience.

Printing and packaging, travel and tourism, and industrial transport and logistics have all experienced a decrease in distress levels compared to the same period in 2024.

Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “Across the region we’re seeing mounting financial pressure on businesses, many of whom are being squeezed from all sides.

“The rise in employers’ National Insurance contributions has pushed up the cost of employment, while energy costs, borrowing costs, and input prices remain stubbornly high.”

The warning comes amidst a mixed economic picture.

UK GDP fell by 0.1 per cent in May, while inflation rose unexpectedly to 3.6 per cent in June.

The Bank of England’s decision to maintain interest rates has kept borrowing costs high for businesses.

In addition to the rising early-stage distress, around 3,400 Yorkshire businesses were in critical distress in the second quarter, a 6.8 per cent increase from the previous quarter, and a 25.1 per cent rise year-on-year.

Some sectors, however, saw year-on-year drops in advanced distress, including travel and tourism, hotels, and food and drink production.

Mr Pitts added: “The underlying message is clear: there’s a growing cohort of businesses under pressure, and unless conditions improve, we could see more tipping into serious trouble over the months ahead.”