Nearly 51,000 companies in the South West are in ”significant financial distress”.
Latest figures from corporate insolvency firm Begbies Traynor found 50,962 businesses in the region in difficulty in the first quarter of 2021 - up 32% the year before.
The Red Flag Alert Data includes businesses in Bristol, Cornwall, Devon, Dorset, Gloucestershire, Somerset, Wiltshire and the Isles of Scilly.
The hardest-hit industries include professional services, which saw a 20% rise in ailing firms in the three months to the end of March, and construction, which saw a 16% increase.
In Bristol, 8,396 firms found themselves struggling in the first quarter - an increase of 38% over the same period in 2020.
In Somerset, nearly 9,000 firms are in trouble - up 32% year-on-year - while in Gloucestershire it is nearly 8,500, an increase of 31% since the first quarter of last year.
Paul Wood, partner at Begbies Traynor in Bristol, said: “The last 12 months have undoubtedly been some of the hardest that many businesses have encountered.
“We must remember that this is no ordinary recession and while some businesses have had significant assistance from central government, large parts of the economy have had to function with their doors closed to their main source of custom.”
Nationally, 723,000 businesses are now in distress - up 42% year-on-year. The first three months of the year was the biggest quarterly increase (15%) in distressed companies since 2014 – equivalent to 93,000 ailing businesses.
Mr Wood added: “With the reopening of the economy over the next few months, there is a lot of work for many businesses to do, but those that have the talent to thrive in normal circumstances will find a way to adapt.
“The pandemic has changed customer expectations and behaviours potentially permanently, and those businesses that were profitable pre-Covid-19, and can demonstrate a strong recovery plan, can survive.”
