Devon in dire straits as over 8,500 businesses are on the verge of collapse

The number of firms in financial trouble has risen sharply

Over 8,500 businesses in Devon are on the ropes financially, and figures have shot up over the past year.

The new Red Flag Alert report is raising alarms, spotlighting the South West’s rise in company woes, including those in Devon.

Though Plymouth has taken a hit with an increase in financial struggles year-on-year, Exeter’s actually bucked the trend, witnessing a drop compared to both last year and the previous quarter. But it’s not all good news – the whole South West is reeling from a severe uptick in corporate hardship, says business recovery experts Begbies Traynor, who keep tabs on UK firms’ financial pulse.

Crunching the numbers for the first three months of 2025, a worrying 41,164 South West businesses find themselves in hot water – that’s “significant” financial distress to be precise, marking a 4.9% hike over the year, despite a promising 14.4% decline since the first quarter. Devon specifically is home to 8,554 of these struggling enterprises, clocking a concerning 5.2% increase from Q1 in 2024.

Yet, there’s a silver lining as this figure represents a 13.8% dip from the final quarter of 2024. Begbies Traynor notes this up-and-down pattern mirrored in urban centres.

Plymouth’s woes have jumped by 2.4% over the year to 965 firms, although that’s down from the 1,178 of the previous quarter. The city saw a recent spike but now shows some signs of easing, reports Devon Live.

On the flip side, Exeter has something to smile about with a 3.7% yearly downturn and a significant 17.6% fall from the quarter before, leaving 733 companies grappling with serious financial issues at the start of the year.

The construction sector’s taken a heavy knock again, with Exeter seeing 159 firms hitting the skids and Plymouth not far behind at 166. Devon’s chalked up a sorry total of 1,515 struggling construction companies, all counts higher than those grim figures from Q1 2024.

In the world of real estate and property services, 68 Exeter businesses are teetering on the edge, while Plymouth’s got 172 in a tight spot. Altogether, there’s distress signals coming from 964 Devon firms.

Retail’s also feeling the pinch, with 37 Exeter shops in dire straits, Plymouth home to 57 troubled retailers, and Devon tallying up 628. Manufacturing’s fared a tad better; there’s 12 Exeter and 25 Plymouth outfits facing troubles, adding up to 239 in Devon.

On a national scale, the latest Red Flag Alert research for Q1 2025 has clocked 579,276 businesses wobbling – that’s down a hopeful 11.5% from the last gasp of 2024, but it’s still a worrying 4.5% jump year-over-year. And there’s more – “critically” distressed businesses have dipped by 3.1% to 45,416 in Q1 2025, but hold your applause, it’s still 13.0% up from the previous year.

Michael Hall, director at Begbies Traynor, had his say: “There is some progress in these figures and adds to economic readings of steady, if unexpected, positivity across the UK. The bounce back in distress figures from the start of the year also demonstrates the resilience of businesses across Cornwall and Devon, as well as the wider region.

“However, with tariffs, taxes and various other challenges weighing down on businesses – especially in sectors like construction, retail and property – there will remain caution from business leaders across the region and there will be administrations and liquidations in the future. In this climate, businesses should be looking at their past, present and future income streams and getting help at the first signs of distress.

“Where are they spending their money and what challenges or windfalls are the horizon they can plan for? For the businesses – small and large – that manage to push through these significant headwinds then there may be opportunities uncovered as brighter skies emerge.”

The Red Flag Alert has been keeping tabs on corporate financial distress since 2004 and is a go-to gauge for the fiscal fitness of UK firms in every industry and corner of the country.

The Red Flag Alert’s clever algorithm sniffs out signs of corporate distress by sifting through company accounts and heaps of factual, legal and financial info from a variety of top-notch sources, including the inside scoop from the UK’s leading insolvency firm, Begbies Traynor.

They’ve given their algorithm a bit of a facelift in H1 2023 to better spot the risk factors in the data. They’ve even backdated the results so you can compare apples with apples when looking at the figures.

The algorithms powering Red Flag Alert have been enhanced and updated, with firms now evaluated against a fresh scorecard of indicators to provide deeper insight and precision into the health of businesses.