The number of UK businesses in “critical financial distress” has jumped by more than a third amid fresh pressure linked to the conflict in the Middle East , according to new research. Hotels and leisure firms are in particular distress after facing higher labour costs and taxes over the past year, latest research from Begbies Traynor Group (BTG) has shown. The corporate restructuring specialist’s latest quarterly red flag report indicated that more firms edged closer to collapse in the first quarter of 2026. It found that the number of companies considered in “critical financial distress” rose by 36.9% to 62,193 for the quarter, compared with the same period a year earlier. The number of businesses in “significant” financial distress meanwhile rose by 9.6% year on year to 634,867. Firms have faced pressure from a number of tax increases over the past year, including increases to national insurance contributions.…