UK Business Insolvency Trends 2025: More Companies Struggling Amid Rising Costs

The latest UK business insolvency trends in 2025 reveal that companies are continuing to face a challenging economic environment, with rising costs, policy uncertainty, and global trade tensions all contributing to financial instability. The latest insolvency figures for April 2025 reveal a modest month-on-month increase in corporate failures, underscoring the pressure many companies—particularly SMEs—are under. This article explores the latest data, industry insights, and the broader economic context affecting business resilience.

April Sees Increase in Corporate Insolvencies

The number of corporate insolvencies increased between March and April this year by 2.9%, according to the UK Government’s official insolvency statistics The figure was a 5.1% decrease compared to April 2024, but a 13.2% increase compared with April 2023.

Liquidation Trends

Creditors’ Voluntary Liquidations remain the process favoured by most struggling companies, affected by high costs together with political and economic uncertainty. Compulsory liquidations are at their highest level in more than five years, with creditors more likely to chase unpaid debts as they come under increasing pressure themselves.

Insights from the UK Insolvency Sector

Tom Russell, President of R3, the UK’s insolvency and restructuring trade body, said:
“Increasing costs and uncertainty are continuing to drive corporate insolvencies. April saw the introduction of the new rates for Employers’ National Insurance Contributions and Minimum Wage, which have increased overheads for businesses at an already challenging time. Many businesses will already have increased prices and cut expenditure to cope with the existing economic challenges and many, especially SMEs, will find it increasingly difficult to respond to further cost increases.

It is unlikely that we will see the full impact this will have on businesses until later in the year, but the prospect of these changes being introduced has influenced a number of directors’ decisions to seek insolvency and restructuring advice and consider the future of their businesses. The recent increase in unemployment indicates that the tax increases, along with the prospect of the Employment Rights Bill coming into law, has also affected hiring levels and investment as management teams wait to see how it will affect their wage bills, and we expect this to continue until the picture is clearer.”

Global Trade and Tariff Concerns

“Alongside this, businesses have faced the impact of the introduction of the US tariffs. While some of the outcomes from the President and Prime Minister’s recent announcement will be a relief to businesses in a range of sectors, a number of the details of the tariffs still need to be confirmed, and there is no denying their introduction will make it more expensive to export to America.

The uncertainty and unpredictability around US tariff policy generally is also likely to affect costs, growth and investment as both business owners and lenders will look at how the tariffs will affect revenue and profits and may choose to change their plans, or review or withdraw their funding once these have been considered.”

Wider Economic Context

The Office for National Statistics has also highlighted broader economic challenges, including rising costs, reduced investment, and cautious hiring trends.

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