Insolvency practitioners Begbies Traynor has reported a 68 per cent increase in the number of bar and restaurant operators showing signs of 'distress' during the first quarter of 2011.

According to its Q1 2011 Red Flag Alert, the leisure and culture industry has seen a 60 per cent increase in the amount of businesses running into financial difficulties. The study, which monitors a series of performance indicators of company distress, also saw a 23 per cent hike in sports and recreation firms with 'significant' or 'critical' problems.

Compared with the same period, the overall number of businesses facing 'critical' financial issues went up by 11 per cent as discretionary spending is affected by austerity measures. Ric Traynor, executive chair of Begbies Traynor Group, said: "The figures for Q1 2011 show the number of UK companies facing 'critical' problems has risen year on year with significant increases across the leisure sector in particular.

"The hike in oil prices and January's VAT increase has made cash flow and credit control essential priorities for most businesses with some seeking payments through the courts." Image: shutterstock.com/Yellowj