ALMOST 2,500 business in Southampton are in “significant” financial distress, a report says.

The analysis by Begbies Traynor blames weak consumer spending and the continuing economic and political uncertainty.

It found the retail and building trades were the areas to have seen the biggest increase in financial problems.

The business recovery and advisory firm found the number of businesses struggling locally plateaued between the first and second quarters of 2019 – standing at 2,454. But some sectors, particularly retail, fared worse.

The Red Flag Alert data, which monitors the financial health of UK companies, revealed that there were 484,000 in significant financial distress in the second quarter. Average company debt had increased 122 per cent in the past three years to £66,000.

In Southampton, businesses in the retail and construction sectors saw the biggest quarterly rises in distress in the second quarter – increasing by five per cent and four per cent respectively.

Steve Powell, partner at Begbies Traynor in Southampton, said: “This latest Red Flag Alert shows the desperate need for political and economic clarity, as businesses continue to be hit hard, with retail companies most affected by the weakest consumer spending since records began in the mid-1990s.

“In addition, the national figure of average company debt shows that any gambles taken on debt could hit companies hard if power doesn’t return to the pockets of consumers soon.

“We have to remember that while an average debt of £66,000 won’t seem much to a multi-million-pound company, this can be a significant amount for SMEs, which are the engine room of both Southampton and the wider UK economy.”

Some sectors in Southampton showed tentative signs of stability, with a four per cent drop in the number of distressed bars and restaurants and a similar fall for telecommunications and IT companies.

Mr Powell added: “While there have been some positive signs in this Red Flag Alert – with a plateauing in the number of struggling bars and restaurants in Southampton – there is always a storm brewing on the horizon in the current business climate.

“It has never been more important to have a careful navigator at the helm to steer towards calmer seas.”

Last week, the National Institute of Economic and Social Research said economic growth in the UK had stalled and there was a one in four chance that the country was already in recession.

The think tank suggested that chances of Britain leaving the European Union without a deal stood at 40 per cent, even before new prime minister Boris Johnson took an increasingly hard line over the issue of a no-deal Brexit.

The government’s independent Office for Budget Responsibility has said a no-deal Brexit would trigger a recession that would shrink the economy by two per cent.