The UK could witness the collapse of an “unprecedented number of otherwise healthy businesses” over the coming months due to rocketing energy bills, insolvency experts have warned.

Red Flag Alert, which monitors the financial health of larger firms, has said more than 75,000 companies, with revenues of £1 million or more, are at risk of insolvency due to energy price hikes.

It added that 26,720 are at risk of failing completely as they struggle to swallow higher costs.

The warning comes as businesses around the UK await an update from the new Prime Minister Liz Truss and her Government over potential support.

The Government is expected to announce significant financial support, including a potential freezing of electricity bills, for millions of households.

Businesses, which are not covered by a price cap, have seen energy prices rise by as much as 400% over recent months after the Russian invasion of Ukraine sparked a surge in gas prices.

Red Flag has already predicted 26,000 insolvencies for the current year but said it expects this to rise further in 2023.

It stressed there are also many more small businesses, especially in retail and hospitality, that will also face failure due to increased energy costs.

Red Flag estimates that it will cost around £100 billion a year in business support to mitigate the impact of this cost inflation.

The report said: “Government support for households is important. However, supporting businesses in dealing with uncapped energy costs should also be a priority.

“If the Government doesn’t provide financial support to businesses, many could be forced to lay off staff.

“A rise in unemployment would put untold pressure on households and would be catastrophic for the economy.”