More than 28,000 retailers are facing “significant” financial distress at the end of 2024, driven by rising business costs and weak consumer confidence, according to a report.

The number of retailers under the more severe measure of “critical” financial distress jumped 25% to 2,124 in the final three months of the year compared with the previous quarter, said the insolvency specialists Begbies Traynor.

The general retail sector is under most pressure, with a 29% quarterly increase in businesses in critical financial distress, rising to 1,457 from 1,127 in the third quarter.

In the food and drug retail sector there was a 17.2% quarterly increase, with the number of businesses facing collapse rising from 569 in the third quarter to 667 by the end of the 11th week of the final quarter of this year.

“This year has highlighted the resilience and adaptability of some UK retailers, but the sector remains under significant strain,” said Julie Palmer, a partner at Begbies Traynor. “Clearly, some retailers have found ways to manage financial pressures effectively, but others, particularly in general retail, are struggling under the weight of rising operational costs and squeezed consumer spending.”

The report comes as fewer consumers ventured out to high streets and shopping centres to take advantage of the Boxing Day sales this year.

Footfall across UK retailers was down 7.6% year on year as of 8pm on Thursday, according to data from MRI Software.

Many shoppers focused on pre-Christmas shopping, with footfall levels up 18% on Christmas Eve compared with last year.

However, despite the quarterly increase the number of UK retailers in critical financial distress has fallen slightly on an annual basis, from 2,142 in the fourth quarter last year.

Overall, a total of 28,747 retail businesses in the UK are facing “significant” financial distress, down on the 34,494 in the same quarter last year.

Palmer said that there was an expectation of “elevated” insolvency levels next year as the measures announced in the autumn budget -– including planned increases to employers’ national insurance contributions, the increase in the minimum wage and adjustments to capital gains tax – businesses.

“Even for more resilient businesses the pressures remain relentless and many will likely face financial challenges next year as they navigate these compounded difficulties,” Palmer said. “With mounting challenges on the horizon, weaker businesses are likely to find little joy as we enter the new year.”

MRI Software expects an uplift in retail footfall from Friday as many major retailers reopen, including John Lewis, Marks & Spencer, Next and Aldi.