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The UK saw Europe\u2019s steepest jump in the proportion of companies in financial distress last year as the country went through a period of\u00a0sluggish economic growth<\/a>.\u00a0<\/p>\n Some 9.9% of UK companies were in distress last year, up from 8.4% in 2022, according to a survey from consulting firm Alvarez & Marsal. It was the largest year-over-year increase in the survey and only the combined market of Belgium, Netherlands and Luxembourg saw a higher rate, at 10.2%.\u00a0<\/p>\n The consulting firm pointed to \u201cstagnant economic conditions\u201d in the UK, which aligned with the pick-up in struggling businesses. The UK economy went through a\u00a0shallow recession<\/a>\u00a0last year.<\/p>\n The UK is also among countries with \u201csignificant exposure to the sectors under most pressure, particularly those reliant on consumer spending like retail, media & entertainment, and industries with high-cost bases, including manufacturing and construction,\u201d Chris Johnston, European co-head of financial and operational restructuring at A&M, said in emailed comments.\u00a0<\/p>\n A&M\u2019s analysis shows levels of distress reaching the highest since the peak of the pandemic across Europe and the Middle East, with tighter monetary policy and slower growth hitting over-leveraged companies. Around 9.2% of companies were considered distressed in 2023 across the region, according to the study, which took into account more than 8,200 listed and private firms.\u00a0<\/p>\n The survey classifies firms as in distress if they have significant deficits in both their financial and earnings situations.<\/p>\n \u201cThe great unwinding of corporate leverage is currently underway, with defaults in Europe at their highest year-to-date levels since 2008,\u201d A&M said in its report on the survey results, citing data from S&P Global Ratings.<\/p>\n In the UK, A&M highlighted how a slowdown in consumer spending impacted the retail fashion sector, with 21% of firms in the industry now in distress. Superdry Plc, known for its boldly branded clothing, is planning to\u00a0delist<\/a>\u00a0from the London Stock Exchange following a debt restructuring.<\/p>\n However, the UK sector with the highest share of distress was media and entertainment. A&M pointed to consumers reassessing subscriptions like streaming services and the disruption from the US writers\u2019 strike on film and TV production.\u00a0<\/p>\n Across the continent, chemicals companies also saw higher levels of distress, amid lower demand and a lack of competitiveness against other regions, particularly China.\u00a0<\/p>\n<\/div>\n\nEurope, Middle East<\/h2>\n
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