Business failures continue declining from record highs, though rates remain elevated compared to pre-pandemic levels
Company insolvencies across England and Wales fell significantly in June 2025, dropping 16% compared to the same month last year and 8% from May, according to new official statistics. The 2,043 company failures recorded represent a continued retreat from the 30-year high witnessed in 2023.
Key Trends Signal Stabilization
The data reveals a business environment showing signs of stabilization after a turbulent period. Creditors' voluntary liquidations (CVLs), which account for 78% of all insolvencies, decreased 18% year-over-year to 1,585 cases. However, compulsory liquidations bucked the downward trend, rising 13% compared to June 2024, suggesting some companies are still facing severe financial distress.
Administrations, often seen as a rescue mechanism for viable businesses, fell sharply by 35% year-over-year to just 111 cases, indicating fewer companies are attempting formal restructuring procedures.
Historical Context Provides Perspective
While current insolvency numbers remain concerning, they pale in comparison to previous economic crises. The rolling 12-month insolvency rate of 52.4 per 10,000 companies—equivalent to one in every 191 businesses—sits well below the peak of 113.1 per 10,000 seen during the 2008-09 recession.
Sector Analysis Reveals Uneven Impact
Construction continues to bear the heaviest burden, accounting for 17% of insolvencies over the past 12 months with 4,056 failures. The retail and wholesale trade sector follows closely at 15%, while accommodation and food services—still recovering from pandemic disruptions—represents 14% of cases.
Most sectors showed improvement or stability in the year to May 2025, with accommodation and food services experiencing the largest decline at 10%. Administrative and support services was among the few sectors to see increases, rising 3%.
Regional Variations Emerge
Scotland recorded 105 insolvencies in June, down 4% from the previous year, with an annual rate of 51.6 per 10,000 companies. Northern Ireland saw a more volatile pattern, with June insolvencies jumping 47% year-over-year to 25 cases, though the 12-month rolling rate decreased to 37.5 per 10,000 companies.
Economic Implications
The declining insolvency trend suggests the UK economy may be moving past the acute financial stress that characterized 2022 and 2023, when the withdrawal of pandemic support measures and rising interest rates created a perfect storm for business failures.
However, the elevated numbers compared to 2019 indicate underlying economic challenges persist.
The continued rise in compulsory liquidations—forced closures initiated by creditors—suggests a bifurcated market where some businesses are successfully navigating current conditions while others face insurmountable financial pressure.
As the UK economy continues to adapt to post-pandemic realities and evolving market conditions, these insolvency figures will remain a crucial barometer of business health and economic resilience.