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More than 9,000 Leicestershire businesses found themselves in “significant” financial distress during the spring, according to the latest figures from insolvency firm Begbies Traynor.

However, after several months of things getting worse, the county did see a 9 per cent drop in the number of struggling businesses from the first three months of the year to the second three months – though it was significantly worse than the same quarter last year.

Nationally, the latest Red Flag Alert research for the second quarter of 2021 recorded 651,492 businesses in “significant distress”, up 24 per cent year-on-year.

However that was down 10 percent from the first quarter of 2021, which saw 723,000 in financial difficulties, suggesting pent-up consumer demand had delivered a boost to help business recovery.

Despite this, businesses are still facing a tough outlook, with Begbies warning that court action is on the rise and September could spell a wave of insolvencies.

Martin Buttriss, partner at Begbies Traynor in Leicestershire, said: “These latest Red Flag figures may show a positive recovery in Leicestershire, with pent up consumer demand pulling some businesses out of harm’s way, but the number of zombie businesses remains considerable, with many in a fragile state.

“Covid has dramatically accelerated the º£½ÇÊÓƵ’s zombie business population, with many businesses taking on unsustainable government backed debts during the pandemic in order to survive.

“With constant changes to the º£½ÇÊÓƵ roadmap out of lockdown, many remain in a precarious position, with any future lockdowns likely to impact insolvency rates.