There has been an “unprecedented” rise in the number of businesses on the brink of insolvency, according to a closely-watched report.

The latest Red Flag Alert report by Begbies Traynor, an insolvency specialist, showed those in critical financial distress rose by 50% in the three months to December compared to June-August.

It said that 46,583 businesses were clinging on with consumer-facing firms, such as hospitality businesses, bearing the brunt of the deterioration.

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It added that there were “notable” increases in financial stress across 21 of the 22 sectors of the economy that the study covered.

The report pointed to pressures on many fronts from rising energy costs, budget tax measures, high interest rates and weak consumer demand.

The report was released as a key measure of the latter, released once a month by GfK, showed consumer confidence at its lowest level since December 2023.

All five of the survey’s components, including the outlook for personal finances and the economy, declined.

The findings of both reports chime with a slew of downbeat economic signals since Labour’s election victory, with stagnation taking hold on a quarterly basis.

Chancellor Rachel Reeves warned in late July of a tough budget ahead to plug a £22bn “black hole” in the public finances that a Treasury review was said to have uncovered.

The budget is set to raise taxes on businesses, from April, by £25bn to help increase funding for investment and public services but firms argue the financial hit will just result in lower investment, higher prices, and job losses across the board.

Julie Palmer, partner at Begbies Traynor, said of the Red Flag Alert’s findings: “Across nearly every sector, there has been a unprecedented level of growth in the number of firms who are at serious risk of entering insolvency in the next 12 months.

“The fact that the distress is being felt across almost every corner of the economy highlights how difficult the outlook is for UK businesses right now.

“After a disappointing Christmas, consumer-facing industries, in particular, are feeling the strain, with rising operational costs and higher wages adding to an already difficult situation.

“With many such businesses already operating on thin margins, I fear the current situation will undoubtedly push some over the edge.

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“Indeed, at a time when consumer confidence is so volatile and borrowing costs look likely to be structurally higher for the foreseeable future, the situation feels very precarious.

“Sadly, this has only been exacerbated by the tax rises and increase in national minimum wage levied on businesses during the October 2024 UK budget which means the financial strain on businesses will only increase later this year.”

The government has consistently defended the budget, saying it will lay the foundations for growth that the country so badly needs.

Public investment is forecast, by economists, to help output pick up in the second half of the year.

However, many caution that the response by businesses to the budget will also be crucial.

For three days Donald Trump dominated Davos from a distance.

On the fourth, he did it in person, albeit virtually, with a speech that took his threats of economic conflict with Europe directly to its political leaders.

Beamed from the White House to the World Economic Forum, he delivered a message of total confidence in American might, and a direct challenge to those that do not play along.

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Initially, he stuck to the inauguration script and his domestic program but, teed up by a question from his Mar-a-Lago neighbour and former adviser Stephen Schwarzman, co-founder of the Blackstone Group, he let rip.

Mr Schwarzman identified a theme of this week, frustration at EU regulation among businesses, and the president took full advantage.

He criticised taxes on American companies, and what he sees as a trade imbalance. “They don’t take our food, they don’t take our cars, but they send us cars by the million.”

EU demands for $15bn in back taxes from Apple, as well as investigations into Google and Facebook, were also slammed. “These companies, like them or not, these are American companies.

“Nobody’s happy with it and we are going to do something about it. I’m trying to be constructive, I love Europe, but they treat the US very unfairly.”

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His counter-offer to the businesses listening; corporation tax of just 15% for companies that shift their manufacturing to the US, and tariffs for those that don’t, a position that would inevitably bring retaliation.

In the audience, the heads of the European Central Bank, the World Trade Association, the International Money Fund and sundry cabinet ministers and central bankers, shifted in their seats.

As if to emphasise what Europe is up against, Mr Trump cited a $600bn investment promised by Saudi Arabia’s Crown Prince Mohammed bin Salman, and suggested “he round it up to a trillion”.

Having parked metaphorical tanks on chancellery lawns, he offered some hope, but not detail, on how he might address the real ones rolling across Ukraine.

Referring to “millions of dead bodies lying on the flat fields” he said efforts to secure peace “should be under way”. Asked when that might happen, he said the answer lay with Russia. “Ukraine is ready.”

Having started the week guessing what Trump 2.0 might mean, Davos’ delegates, that unique mix of money, power, civil society and celebrity, leave the Alps under no illusion of the disruption ahead.

Sainsbury’s has revealed plans to cut more than 3,000 jobs.

The supermarket said the move was a bid to save money ahead of a £140m leap in costs from budget tax measures, due to come into force within weeks.

Head office and senior management roles are among those affected, the chain said, adding that the cost-saving drive would also result in the closure of its remaining cafes, hot food, patisserie, and pizza counters.

All the proposals, Sainsbury’s added, were subject to consultation.

Chief executive Simon Roberts said: “We are facing into a particularly challenging cost environment which means we have had to make tough choices about where we can afford to invest and where we need to do things differently to make our business more efficient and effective.”

He made the announcement despite the company’s decision, a fortnight ago, to award inflation-busting pay rises to store workers across the business, which also includes Argos.

Mr Roberts is among business leaders to have publicly spoken out after October’s budget put firms on the hook for the bulk of £40bn in tax increases.

He warned then that additional costs would result in higher prices for customers as the chain did not have the “capacity to absorb” a “barrage of costs”.

Sainsbury’s, he explained, was facing an additional annual bill of £140m from April to cover the cost of additional employer national insurance contributions alone.

Industry bodies have widely spoken of how higher costs will choke investment and jobs.

Cafes are due to shut at the following locations:

Fosse Park, Leicestershire

Pontypridd, South Wales

Rustington, West Sussex

Scarborough, North Yorkshire

Penzance, Cornwall

Denton, Greater Manchester

Wrexham, North Wales

Longwater, Norwich, Norfolk

Ely, Cambridgeshire

Pontllanfraith, South Wales

Emersons Green, South Gloucestershire

Nantwich, Cheshire

Pinhoe Road, Exeter, Devon

Pepper Hill – Northfleet, Kent

Marshall Lake, Solihull, West Midlands

Rhyl, North Wales

Lincoln, Lincolnshire

Bridgemead, Swindon, Wiltshire

Larkfield, Aylesford, Kent

Whitchurch Bargates, Shropshire

Sedlescombe Road, Hastings, East Sussex

Barnstaple, Devon

Dewsbury, West Yorkshire

Kings Lynn Hardwick, Norfolk

Truro, Cornwall

Warren Heath, Ipswich, Suffolk

Godalming, Surrey

Hereford, Herefordshire

Chichester, West Sussex

Bognor Regis, West Sussex

Newport, South Wales

Talbot Heath, Dorset

Rugby, Warwickshire

Cannock, Staffordshire

Leek, Staffordshire

Winterstoke Road, Bristol

Hazel Grove, Stockport, Greater Manchester

Morecambe, Lancashire

Darlington, County Durham

Monks Cross, Huntington, North Yorkshire

Marsh Mills, Plymouth, Devon

Springfield, Chelmsford, Essex

Durham, County Durham

Bamber Bridge, Lancashire

Weedon Road, Northampton, East Midlands

Hempstead Valley, Kent

Hedge End, Hampshire

Bury St Edmunds, Suffolk

Thanet Westwood Cross, Kent

Stanway, Colchester, Essex

Castle Point, Essex

Isle of Wight

Keighley, West Yorkshire

Swadlincote, Derbyshire

Leicester North, East Midlands

Wakefield Marsh Way, Wakefield, West Yorkshire

Torquay, Devon

Waterlooville, Hampshire

Macclesfield, Cheshire

Harrogate, North Yorkshire

Cheadle, Greater Manchester