The number of companies forced to close across England and Wales remained high last month, new data from the Insolvency Service shows.
The figures show there were 2,081 corporate insolvencies in July, up slightly from 2,053 in June and 2,078 for the same period last year, indicating that financial pressures across the market remain persistent.
Smaller businesses remain particularly vulnerable, with over 97% of insolvencies involving companies with annual turnover below £1 million, many of which are owner-managed.
Regionally, London, the South East, and the Midlands have seen a year-on-year increase in failure rates, whilst the North West and North East have seen a brief respite in insolvency rates.
Analysis by PwC shows that construction and retail continue to be the hardest hit sectors. There has also been a noticeable increase in failures across IT and general business services as customers reduce discretionary spending and become more adept at utilising AI.
Insolvency rates for the first half of 2025 are tracking closely to last year, suggesting the UK could see more than 24,000 business failures by year-end if current trends persist.
Notably, there has been a 10% increase in winding-up petitions since May, which could be interpreted as a sign that creditors are increasingly willing to resort to more extreme measures to recover their debts, PwC said.
“The July increase in insolvencies, following a dip in June, shows that the finances of many small and owner-managed businesses continue to be fragile,” said David Kelly (Head of Insolvency at PwC).
“Cash flow remains a critical challenge, especially for companies that have seen significant increases in their cost base but have struggled to pass these costs on to customers. These smaller firms, often the lifeblood of the UK economy, are feeling the full force of the current economic pressures,” he said.
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