Insolvencies ease in signs of UK businesses’ resilience
Insolvencies declined slightly in June in signs UK businesses under pressure from higher costs have weathered through tax rises and low national spirits.
In new data published by the Insolvency Service, company insolvencies fell by eight per cent in June compared to the month before.
The number of insolvencies – 2,043 – was also 16 per cent lower than at the same time in 2024.
The month saw a sharp decrease in the creditors’ voluntary liquidations, the most common form of insolvency which involves companies getting wound up by directors with the agreement of creditors.
Administrations were also lower in June, which can often be more complex affairs that sees insolvency firms intervene and look to rescue businesses.
The sectors that saw the highest number of administrations in the first half of the year include manufacturing and construction, though levels were lower the same six months last year.
Insolvencies risks worsening
Retail and leisure firms have appeared to struggle more this year, reflecting jobs data showing a sharp decline in employment across hospitality and at high street shops.
David Hudson, restructuring advisory partner at FRP, said new data was a “glimmer of relief” as hospitality and retail businesses were now “reaping the benefits of record hot weather”.
“June’s unexpected jump in inflation will only serve to continue eroding profit margins and consumer demand,” Hudson said.
“This environment is forcing businesses to fight on multiple fronts. Many will likely only be experiencing breathing space after dramatically paring back costs.
“Until demand shows a more sustained recovery and input costs ease further, there’s a risk that this reprieve is just a pause rather than a turning point.”
Kroll’s head of restructuring Benjamin Wiles said the overall decline in administrations showed “a level of resilience that shouldn’t be overlooked”.
“The question we are asking is whether businesses are fundamentally stronger or are they simply treading water. The second half of the year will be critical in determining whether this resilience can be sustained or if further pressures will tip more companies into distress.”