Almost 2,000 businesses in Lincolnshire experienced ‘significant’ or early-stage financial distress in Q3 2025, up 12% on the previous quarter and 8.3% on the same three months in 2024, according to the latest Red Flag Alert research from leading independent business rescue and recovery specialist Begbies Traynor.
While the increase in distress across Lincolnshire has gathered pace over the summer, the region’s experience mirrors the national picture. Across the UK, the number of firms in early-stage distress rose by 9% compared with Q2 2025 and by 14.8% year-on-year, representing almost 726,600 businesses in financial difficulty.
In Lincolnshire, more than half of the 22 industry sectors tracked recorded rises in significant distress since the previous quarter.
Lincolnshire’s construction industry continued to be the sector with the largest number of distressed businesses, with 358 firms affected, up 2.3% on the previous quarter. General retail was also badly affected, with 144 firms showing signs of financial strain, up 23.1% on the previous quarter.
The telecommunications and IT financial distress rose by 11.5% to affect 116 firms and real estate and property services also saw distress levels climb by 6.2%, affecting 223 businesses.
A small number of sectors showed some improvement. Food and beverages reported a 25% fall in distress, with just 12 businesses affected, while food and drug retail – which includes supermarkets – also improved, down 23.4% to 36 businesses.
As well as rising early-stage distress, the number of firms in critical or advanced distress has also continued to climb nationally, with Begbies Traynor warning that many smaller businesses are still facing intense financial pressures.
Gareth Rusling, who heads Begbies Traynor’s Lincolnshire offices in Lincoln, Scunthorpe and Grimsby, said “The continued rise in business distress across Lincolnshire highlights how challenging trading conditions remain. With recent readings from retail and inflation figures businesses will be hoping that there can be some easing of borrowing costs, stubborn inflation and weaker demand. Throughout the year these have all been combining to squeeze margins, particularly in key sectors like construction, retail and manufacturing.
“While some areas such as food retail have shown encouraging signs of resilience, the overall picture remains difficult, and businesses that are starting to feel the strain should seek early professional advice rather than waiting until problems become critical.”
Begbies Traynor’s Red Flag Alert has monitored early and critical distress levels among UK businesses for nearly 20 years, using a range of legal, financial and trading indicators.