Company insolvencies surge due to increased costs in the UK

In May 2025, England and Wales reported a significant increase in company insolvencies, with the total reaching 2,238. This figure represents an 8% rise from April and a 15% increase compared to May of the previous year. The rise is primarily attributed to the financial pressures faced by businesses following a series of cost increases, including higher national insurance payments and a jump in national minimum wage, which took effect in April. Business experts warn that the current economic environment is causing many firms to struggle to maintain their operations. The upward trend in insolvencies is primarily driven by creditors’ voluntary liquidations, with 1,734 companies opting to close their doors. Additionally, there were 354 compulsory liquidations noted in the same month, though this figure is a 7% decrease from April, which had presented a 10-year high. The data also highlighted a smaller number of company administrations, totaling 136, and 14 company voluntary arrangements (CVAs) in May. Industry experts, including Mark Ford from S&W's restructuring team, have stated that businesses are navigating through intricate challenges that jeopardize their ability to operate sustainably. Increased costs associated with national insurance contributions and business rates have forced many companies to reassess their pricing strategies, leading to a tension between maintaining customer loyalty and covering rising expenses. This volatility is particularly pronounced in sectors such as construction and manufacturing, where the financial stability of companies remains precarious. As the landscape for businesses continues to evolve amidst these pressures, the potential for further insolvencies looms. David Kelly, head of insolvency at PwC, emphasized that the current economic indicators portray a fragile financing environment for many corporations. The outlook remains cautious as both businesses and consumers assess their financial situations amidst rising costs and uncertain market conditions.