Real estate continues to be the sector hardest hit by the Covid-19 crisis, with 62,615 companies in financial distress, new research shows.

Property has seen the largest year-on-year increase in distressed companies than any other sector, according to analysis by insolvency and advisory firm Begbies Traynor.

It has seen a 23% rise in distressed companies, to 62,615 companies in Q3 2020 from 51,113 the previous comparable period last year.

The number of businesses struggling has risen 6% since the first quarter.

The number of bars and restaurants flagging as distressed increased 10% since the start of lockdown to 19,760 in Q3 from 18,011 in Q1, while retail companies saw a 9% increase in distressed companies since the start of lockdown (32,495 in Q1 compared to 35,448 in Q3).

Construction companies, meanwhile, have seen a 7% increase in distressed companies since last quarter to 72,402.

Begbies Traynor Group chairman Ric Traynor said: “The government’s well-publicised support measures have saved thousands of businesses from certain insolvency in the short term, but the recently launched reduced version of the furlough scheme and the end to government guaranteed loans will serve to give many businesses a brutal reality check.”

He added that government support schemes might not be enough to “shield the businesses which were viable pre Covid” and allow them to “prosper once again when the ‘new normal’ appears”.