The data showed around 12,000 food and drug retailers, including supermarkets, were in financial distress at the end of June

The number of food and drinks manufacturers in financial distress has increased by a further 3%, as Brexit uncertainty and weak consumer spending took its toll on the UK retail industry.

Newly-released data from Begbies Traynor Red Flag Alert showed that in the second quarter of 2019 the number of fmcg manufacturers, including growers, experiencing financial difficulty rose 3% to 3,204. 

Of these, the most striking spike was recorded in the number of struggling cereal-based foods manufacturers, up 79% year-on-year.

There was also a 42% jump in the number of homogenised and dietetic food suppliers in economic peril, a 25% rise in spice growers in trouble and a 6% rise in food product manufacturers facing economic concerns.

Meanwhile, the data showed a 1% increase in the overall number of financially distressed fmcg businesses to over 15k. 

The number of food & drug retailers, including supermarkets, in financial trouble rose 1% year on year to over 12,000.

Of these, the figures showed that 5% more take-away food shops are facing financial difficulty while there was a reduction in the number of greengrocers and butchers, down 7% and 9% respectively. 

The data, which monitors the health of UK companies, showed that 14% of all economically active businesses were in “significant financial distress” with the property, leisure and tourism sectors particularly affected.

The number of businesses in critical financial distress – often a precursor of insolvency – rose 5% year on year, the independent insolvency firm added.

This latest Red Flag Alert demonstrates the ongoing impact of economic and political uncertainty within the UK,” partner at Begbies Traynor Julie Palmer said.

“While consumer spending has historically driven the UK economy, the latest figures demonstrate that falling spending is now clearly having an impact.”

Palmer warned that the economic “stagnation” could leave companies “vulnerable” unless consumer confidence and spending was restored.

The data comes on the back of dire retail sales figures, with July deemed the “lowest on record”.

On a total basis, sales increased 0.3% in the four weeks to 27 July – the slowest pace for the month since records began in 1995 – according to figures from the BRC-KPMG retail sales monitor.