More than 276,000 businesses in the U.K. finished 2016 in "significant" financial distress, with 91 percent of those classified as small to medium sized businesses (SMEs), according to new research.
Independent business recovery practice Begbies Traynor said that the figures represented an increase of three percent compared to the end of 2015, and that 23 percent of the U.K.'s "struggling businesses" were based in London.
Begbies Traynor added that 685,000 start-ups had joined the economy in 2016, with that figure being the highest since the beginning of the financial crisis in 2007.
"The scale of SME distress at the end of 2016 just goes to highlight the fragility of U.K. micro businesses, many of which are underfunded, lack management experience or are flawed in concept," Julie Palmer, a partner at Bebgies Traynor, said in a statement on Monday.
"Although record numbers of new start-ups continue to join the economy each year, a large proportion don't stay in business for long, with growing numbers of aspiring entrepreneurs returning to more established businesses as soon as the opportunity arises," Palmer added.
Going forward, the U.K.'s decision to leave the European Union could continue to have an impact, Ric Traynor, executive chairman of Begbies Traynor, said.
"EU exit negotiations and U.S. trade policy could be major factors affecting business this year either for better or worse whilst rising inflation and fluctuating exchange rates are likely to have a negative impact," he said. "Either way 2017 could well be a defining year for U.K. business."