Begbies Traynor’s Red Flag Alert report found that 589,168 UK businesses reported that they were in significant financial distress towards the end of last year, up 5% on the Q3 figure of 562,550.

The number of businesses reporting that they were in critical financial distress was also up 7%. The data classifies a business in significant financial distress as those with county court judgment orders of less than £5,000 and critical distress is classified as orders over £5,000.

The report also found that there was a 106% rise in county court judgments (CCJs), a key early sign of future insolvencies as creditors are now actively using courts to recover debts.