A large number of businesses are reportedly “teetering on the edge of collapse” amid uncertainty ahead of the Budget.

Shocking data revealed that thousands of British firms have been plunged into significant financial distress this year.

The number of companies in financial distress surged by a third to nearly 633,000 in the three months leading up to the end of September, compared to the same period last year.

Business leaders are bracing themselves ahead of this month's Budget, amid concerns that Rachel Reeves is planning a tax hike on businesses, with the Chancellor reportedly considering an increase in employers' National Insurance contributions.

Experts have also warned that Labour's proposed workers' rights bill could add further strain on businesses by making hiring more difficult and costly.

Research from business advisory firm Begbies Traynor revealed that 632,756 companies were in financial trouble during the third quarter, a 32 percent rise from the same time last year and a 5.1 percent increase from the previous quarter.

The support services, construction, and property sectors were among the hardest hit.

Begbies Traynor chairman Ric Traynor said: “Many business leaders are holding their breath as they await clarity over what the forthcoming Budget will bring.

“The mood music in the lead up to the Budget has led many business leaders to expect companies and investors to bear the brunt of changes to the tax regime.”

Julie Palmer, also of Begbies Traynor, added: “The knock-on effect [of the Budget] could be damaging for many businesses teetering on the edge of collapse.”