New data from insolvency experts Begbies shows worrying surge in the number of Liverpool city region firms in ‘critical distress’ with consumer-facing businesses suffering the most. Tony McDonough reports

Consumer-facing businesses in Liverpool city region such as restaurants, shops and leisure outlets are bearing the brunt of weak consumer spending.

Insolvency specialist Begbies Traynor’s Red Flag report for the final quarter of 2024 reveals there were 593 businesses classed as being in ‘critical distress’ and 6,851 in ‘significant distress’. This was 40% higher than the same period in 2023.

Businesses in significant distress have minor CCJs (less than £5,000) filed against them. Those in critical distress have minor CCJs (more than £5,000) filed against them. Begbies also measures working capital, contingent liabilities, retained profits and net worth.

Begbies says the biggest rises were among consumer-facing sectors with food and drink up 50%, retail up 91% and leisure up 108%.

Official figures show non-essential consumer spending did rise by 1.9% in 2024 but this was a slower rise than in 2023. People are cutting back on food and drink and last week the British Retail Consortium reported a “marked decline” in consumer sentiment.

In the first few weeks of 2025 a number of Liverpool city region restaurants have closed their doors for good. They include Italian Club Fish and Viva Brazil in Liverpool and Burnt Truffle and Leaf in Wirral.

Burnt Truffle was opened by chef Gary Usher in 2015. When it closed he said: “It is a sad day. We were the first crowdfunded restaurant in the UK with non-investment crowdfunding.”

17 of the 22 sectors covered by Red Flag Alert, saw a noticeable increase quarter-on-quarter in the number of businesses in critical financial distress.

After another challenging year, ‘significant’ financial distress rose by 22% year-on-year to 6,851 in the final three months of 2024. However, the latest number is lower than the 6,973 in significant distress in the third quarter.

At the end of 2024, the sectors experiencing the highest numbers of businesses in ‘significant’ financial distress included construction (1,177), support services (1,009), and real estate and property services (898).

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Jason Greenhalgh, partner at Begbies Traynor in Liverpool, said: “After a challenging festive season, businesses across Merseyside, especially those reliant on direct consumer spending, are under mounting pressure.

“Escalating operational costs and rising wages are compounding the difficulties many firms are already grappling with, and for those operating on narrow profit margins, the strain is reaching critical levels.

“With consumer confidence remaining unpredictable and borrowing costs seemingly fixed at higher levels for the foreseeable future, the business environment feels increasingly fragile.”