Hundreds of Worcester companies are in "significant" economic distress, new figures show.

The latest figures from business recovery specialist Begbies Traynor’s Red Flag Alert, which monitors the financial health of UK companies, reveals weak consumer confidence and ongoing economic concerns are driving the trend.

A total of 742 Worcester businesses are at risk of economic failure, marking a quarterly increase of 3.9 per cent, and a surge of 38.7 per cent in a year.

The construction industry appears to be the most troubled sector in the city, with 112 businesses in distress - a 23.1 per cent yearly increase.

There has also been a significant rise in the number of support services businesses in the city facing difficulties, with this industry seeing an annual increase of 14.9 per cent.

Mark Malone, partner at Begbies Traynor in Worcester, said: "It looks like 2024 will prove to be another tough year for businesses.

"We are a little over halfway through the year and the macro-economic environment remains extremely testing, with the latest Red Flag Alert data highlighting a substantial increase in the number of businesses in significant financial distress in comparison to this time last year."

He added: "The good news is that a continuation of falling inflation levels will be helpful for businesses, particularly if interest rates begin to inch backwards later this year.

“Beyond these small glimmers of hope, all eyes are now on our new government as we ask ourselves what they can do to kickstart economic growth in the UK.

"However, the reality is that the government may not be able to act fast enough to stop many struggling businesses from succumbing to the economic pressures with which they are currently grappling."

According to Q2 2024 Red Flag Alert data, 601,950 UK businesses have found themselves in significant distress. This represents a 36.9 per cent increase from the same period in 2023.

"Critical" financial distress leapt by 34.5 per cent to 40,613 businesses, many of which are expected to enter insolvency within a year.

Sectors such as automotive, transportation and logistics, and bars and restaurants have particularly suffered.