THE UK HAS HIT rock bottom according to Begbies Traynor's latest Red Flag report.
There was a 61% rise in the number of professional service firms that found themselves in "critical" financial difficulty in the last quarter of the year compared with the same period last year.
The Begbies Red Flag data monitors early signs of companies in financial difficulty broken down on a quarterly basis.
Other sectors to feel the financial pressure include travel & tourism which saw a 56% year-on-year rise in the fourth quarter compared with Q4 2010. This was followed by support services with 36%, property services with 30% and general retailing with 26%.
Ric Traynor, (pictured) executive chairman of Begbies Traynor, said: "Trends evident in the Red Flag Alert demonstrate that we are likely to be approaching a crucial period for businesses large and small.
"Escalating levels of distress indicate we may be getting close to the bottom of the economic cycle, where so called ‘zombie" businesses, which are inherently insolvent, but have benefited from extensive support measures such as HMRC's ‘Time to Pay' scheme eventually fail.
There is a 24% year-on-year increase in the number of companies overall in "critical" financial distress for the last three months of the year compared with 2010. This includes, insolvency processes as well as court orders and petitions.
Overall there was a 1% increase in distressed companies compared with the previous quarter.
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