With conflicts and the tariff war continuing to destabilise the world economy, increasing numbers of businesses in Northern Ireland are once again seeing signs of early financial distress. According to the latest data from leading independent business rescue and recovery specialist Begbies Traynor, in the second quarter of 2025 a growing number of firms in the province experienced this type of financial distress with levels having risen both since the previous quarter and also compared with the same period of 2024.

The Red Flag Alert report for Q2 2025, which provides a quarterly snapshot of Britain’s corporate health, shows that in the second three months of 2025, instances of early or ‘significant’ financial distress in Northern Ireland once again grew, rising by 9.9% compared with Q1 2025. With early distress now affecting 10,459 businesses in the province, levels also rose compared with Q2 2024, up by 7.2%.

This upward trend was seen across the UK where instances of significant distress increased by 15.1% quarter-on-quarter and by 10.8% year-on-year with 666,876 now feeling its impact.

In Northern Ireland, only three of the 22 industry categories monitored by Red Flag Alert experienced a fall in early-stage distress since Q1 2025, these were: manufacturing (-13%); hotels and accommodation (-6.2%); and sports and health clubs (-5.5%). In contrast, ten sectors saw double-digit growth with bars and restaurants (+23.1%): financial services (+21%); support services (+20.5%)): and real estate and property (+19.1%) among those most adversely affected.

Lawrence O’Hara, who leads Begbies Traynor in Northern Ireland, said: “Unfortunately, the UK’s depressing economic data seems to be continuing with an unexpected decline in GDP in May, hot on the heels of a slight contraction in April. Our latest Red Flag report bears out this gloomy picture with growing numbers of businesses both here in Northern Ireland and across the UK as a whole fighting for survival. Amid a climate of uncertainty with continuing global conflicts as well as Trump’s tariff threats, businesses are a long way from having the certainty they need to achieve growth.”

In terms of ‘critical’ or more advanced business distress, the trend in Northern Ireland was also upward, with instances up by 16% from Q1 2025 to Q2 2025. This type of distress also increased by 13.5% year-on-year in the province with 841 businesses affected. This was reflected nationally with a quarter-on-quarter rise of 8.6% and a year-on-year increase of 21.4%, representing 49,309 businesses across the UK.

Some sectors in Northern Ireland however saw falls in critical distress since the previous quarter, with the strongest performing being: support services (-23.4%); food and beverages and health and education (both -14.3%); followed by hotels and accommodation (-10%).

The sectors in the province that saw the highest quarter-on-quarter rise in advanced distress were: utilities (+800%); sports and health clubs (+162.5%): and leisure and culture (+92.9%).

Mr O’Hara continued: “2025 is proving to be another precarious year for owner-managed businesses as they struggle under the additional pressures of a rise in the national living wage and increased national insurance contributions, as well as inflation continuing to be relatively high. With many already seeing the first signs of financial distress, we urge them to remain vigilant and act quickly to seek professional advice to prevent problems from spiralling out of control.”