Meanwhile, Germany is experiencing a sharp downturn in economic conditions, marked by declining exports and manufacturing output, which adds to the overall uncertainty in the region.

Germany has emerged as the most distressed market, with corporate distress levels hitting their highest point since July 2020, driven by weak investment and falling profitability.

The economic outlook for the UK has worsened, with the Bank of England now projecting a growth rate of only 0.75% for 2025, a significant downgrade from earlier estimates of 1.5%.

In response to these economic challenges, the Bank of England reduced interest rates to 4.5% in February 2025, following previous cuts in late 2024, with the next review set for early May.

Investment concerns have been exacerbated by upcoming changes to Employee National Insurance Contributions and the National Living Wage, which will take effect on April 6, 2025.

Chancellor Rachel Reeves faces mounting pressure as millions of families are confronted with significant increases in household expenses, including council tax and utility bills.

Britain is grappling with significant economic distress, as highlighted by the Weil European Distress Index (WEDI), which reveals a decline in both investor and consumer confidence.

This fragile consumer confidence is largely attributed to the rising cost of living and ongoing economic uncertainty, although potential interest rate cuts could help restore some business optimism.

Inflation has surged recently, with a reported increase of 3% in January 2025, and further rises are expected in the coming months.

The UK continues to be the second most distressed market in Europe, showing an increase in distress levels compared to the previous year, while GDP growth remained stagnant at just 0.1% in the last quarter of 2024.