Over 275,000 companies were showing sings of financial distress at the end of 2016, the thirteenth quarter in a row that business stress in the UK has risen.
The figures from insolvency firm Begbies Traynor show that the number of companies battling 'significant' financial distress grew three per cent year-on-year in the final quarter of 2016.
Nearly a quarter (23 per cent) of the companies struggling financially were in London, and 91 per cent of the companies were small businesses.
Ric Traynor, executive chairman of Begbies Traynor, said it was too early to tell whether the trend would continue this year, but that economic indicators suggested that the new year had "got off to a reasonable start".
EU exit negotiations and US 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.
Either way 2017 could well be a defining year for UK business.
The last time the number of companies under significant distress fell year-on-year was in the third quarter of 2013.