Business News Round Up (21/08/2026)
UK business financial distress rises 9% in second quarter
More than 53,000 UK businesses were in critical financial distress during Q2 of 2026, representing a 9.0% increase from the same period in 2025, according to a statement from BTG Consulting. The number of companies in critical distress reached 53,756 in Q2 2026, up from 49,309 in Q2 2025, based on BTG’s Red Flag Alert research. Businesses in significant financial distress increased 1.1% year-on-year to 674,030 firms from 666,876. Consumer-facing sectors showed the largest annual increases in critical distress. Leisure and Cultural Activities rose 27.1% to 1,478 companies, Hotels and Accommodation increased 26.5% to 510, Sports and Health Clubs grew 21.0% to 980, and Food and Drug Retailers climbed 18.4% to 2,350 companies. Support Services had the highest number of companies in significant distress at 103,815, up 1.4% year-on-year. Construction followed with 101,568 companies, down 0.7%, while Real Estate and Property Services recorded 88,855 companies, an increase of 9.0%.
UK borrows more than expected in July as Healey prepares for first Budget
The government borrowed more than expected in July, according to figures as Chancellor John Healey draws up his first Budget. The Office for National Statistics (ONS) said borrowing, the gap between what the government spends and what it collects in tax, was £1.8bn during the month. Official forecasters had expected a surplus of £500m, meaning the government borrowed £2.3bn more than predicted. Economists warned the figure will restrict Healey and Prime Minister Andy Burnham’s room for manoeuvre as they target measures aimed at easing the cost-of-living for households, with little room to increase borrowing in the Budget on 27 October. Healey has made it clear he will oversee “strong fiscal discipline” at the Budget, which will limit how much the government can spend. He has adopted his predecessor Rachel Reeves’ fiscal rules, which commit the government to funding all day-to-day spending through tax receipts by the end of the decade.
https://www.bbc.co.uk/news/articles/cly8kzkyvwgo
NI bucks wider UK trends as business distress levels fall across the board – BTG
Northern Ireland is the only UK region to experience year-on-year reductions in both ‘critical’ and ‘significant’ financial business distress, according to BTG. The latest Red Flag Alert data, released every quarter by the financial and real estate advisory group, shows the second quarter of 2026 saw 819 instances of critical financial distress recorded in NI. This is a drop of 2.6% compared with a year earlier, countering a UK average rise of 9%. In the period to 30 June 2026, there were 10,153 instances of ‘significant’ or early-stage financial distress, a year-on-year reduction of 2.9%. The Q2 data showed that there were still pockets of hardship in some key sectors however, with sport & health clubs (+24.7%), media (+7.8%), wholesale (+5.4%) and industrial transportation & logistics (+3.8%) seeing the most notable year-on-year increases in significant financial distress.
Scotland leads the UK with fastest growth in new startups, as technology startups drive a new wave of entrepreneurship
The UK’s active business population has reached a record 5.66 million companies, demonstrating the strength and adaptability of British entrepreneurship despite a moderation in new company incorporations, according to the latest New Startup Index. A total of 402,000 new businesses were registered with Companies House in H1 2026, a 5.7% decrease compared with H1 2025. However, entrepreneurial activity remained widespread across every region of the UK, with continued growth in the active company base providing evidence of the resilience of the UK business landscape. Technology businesses were a standout performer. Application software became the UK’s most active startup category with 28,100 new businesses incorporated. The wider digital and technology sector also recorded strong growth, reflecting continued innovation and investment in areas such as AI and emerging technologies. Regional entrepreneurship also remained vibrant. Scotland recorded the strongest growth in startup activity, with incorporations rising 3.73% compared with H2 2025 to 20,900.