The number of businesses that are on the verge of insolvency has risen 12% compared to just three months ago, with sectors dependent on consumer demand, such as tourism, hotels and retailing, the most severely hit according to a new report. The latest Red Flag Alert released by administrators Begbies Traynor found that a total of 5,179 companies faced "critical" financial problems in the second quarter of the year, up from 4,620 in the first quarter and now represented liabilities of almost £60bn, as businesses were impacted by a further squeeze on consumer spending. The report found the following sectors experienced a rise in quarter on quarter 'critical' distress: Travel and tourism up 31%; hotels and accommodation up 47%; and general retailing up 17%. Food and beverage manufacturing figures showed a 24% year-on-year increase in “critical” problems – the first real increase in this sector. Begbies Traynor partner Julie Palmer said: “Many struggling companies made use of the Revenue's Time to Pay Scheme yet a high proportion of businesses have failed to achieve a full turnaround and are now trying to seek time to pay arrangements for a second time - or else apply for the scheme whilst using dividends as a form of remuneration rather than paying HMRC. "The austerity measures mean the Government is finding it difficult to give second chances or extend its support to business owners that have chosen to use their money for another purpose and as a result, the number of winding up petitions issued by HMRC in Q2 2011 has more than doubled since Q1." Separately, a report by Deloitte, found that a total of 43 retailers – an 8% increase from the same period last year – went into administration in the second quarter of the year, on top of the 60 that failed in the first quarter. Across all sectors the second quarter of 2011 saw a decline of 19% on the previous quarter, with a total of 449 companies falling into administration compared with 557 in Q1 2011.