New data has revealed over 50,000 construction and real estate businesses have begun the year in 'significant' financial distress.

According to Begbies Traynor's latest Red Flag Alert report, there was a 17% increase this year in the amount of construction and real estate firms under pressure financially (50,122).

Despite other research suggesting the UK economy is recovering, Begbies Traynor's report reveals all sectors of the economy have seen a 'worrying' rise in financial strains over the past 12 months.

Julie Palmer, Partner at Begbies Traynor, said: "Despite an improving economy, 2015 showed no shortage of challenges for UK businesses, with a slowdown in China and collapsing oil and commodity prices leading to stock market turmoil during the second half of the year. At the same time, manufacturing weakened significantly as a result of continued sluggish growth in Europe, while labour shortages and building materials inflation continued to plague the construction sector.

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"With so many companies beginning the New Year in an unfavourable financial state and even the Chancellor predicting black clouds on the horizon, 2016 looks set to be another challenging twelve months for UK corporates."

Ric Traynor, Executive Chairman at Begbies Traynor, added: "Struggling businesses should not expect any respite in 2016, with the UK economy facing greater headwinds this year from slow global growth, lower levels of business investment and the highest levels of consumer debt seen for five years.

"A proactive, not reactive, approach will be crucial to businesses’ financial strength in 2016, both in terms of managing their cost bases while also driving expansion in a low growth environment."

(LM/MH)