The number of UK companies falling into insolvency dropped sharply in June, offering a moment of respite for businesses after months of economic turbulence.
But experts have warned that the decline may be only temporary, with ongoing pressures threatening a renewed wave of financial distress later this year.
According to the Insolvency Service, there were 2,043 registered company insolvencies in England and Wales in June 2025, down 8% from May (2,230) and 16% lower than June 2024 (2,430).
The drop in insolvencies may ease some concerns over the health of the UK economy, which continues to grapple with rising inflation, tax pressures, and a fragile global backdrop. But figures for the first half of 2025 show that insolvencies remain slightly higher than the second half of 2024, despite being below the 30-year annual high recorded in 2023.
In June, the breakdown of insolvency types included 1,585 creditors’ voluntary liquidations (CVLs), 332 compulsory liquidations, 111 administrations, and 15 company voluntary arrangements (CVAs). There were no receivership appointments.
Paul Williams, Restructuring Partner at PKF Littlejohn, said the fall in June should be welcomed, but it doesn’t paint a full picture.
“With global and domestic markets still navigating instability—driven by international conflict and economic disruption—the UK economy remains under significant pressure,” Williams said.
“While the insolvency figures show a decline in June, the first half of 2025 saw an overall rise compared to the second half of last year.”
He cited ongoing disruptions to supply chains, US tariff policy volatility, inflationary cost pressures, and changes to employer National Insurance contributions as continued headwinds for businesses.
Williams added that while the drop in insolvencies is encouraging, it is still “far from a clean bill of health for UK plc,” urging firms to remain agile, manage risk proactively, and maintain strong financial discipline.
The broader economic outlook remains uncertain. Inflation rose unexpectedly in June to 3.6%, raising questions about the resilience of consumer demand and squeezing already tight profit margins, particularly in retail and hospitality.
Meanwhile, GDP grew by 0.7% in Q2, and employment levels have risen—offering potential signs of green shoots. Chancellor Rachel Reeves, in her recent Mansion House speech, reaffirmed the government’s commitment to reforms aimed at boosting growth, reducing red tape, and encouraging investment.
However, critics remain sceptical. Many businesses are still facing “tough times”, according to David Hudson, restructuring advisory partner at FRP.
“The slight fall in insolvencies offers a glimmer of relief—especially for hospitality and retail, which are now benefiting from record summer weather,” said Hudson.
“But this could be just a pause. Consumer confidence is still low, growth remains weak, and inflation continues to erode margins.”
Hudson warned that many businesses may have only survived by dramatically cutting costs, and without a sustained recovery in demand or a drop in input costs, the reprieve may be short-lived.
As the government approaches the next fiscal cycle and firms continue to digest the effects of tax policy changes, analysts say the business community will need to remain vigilant.
While the fall in insolvencies for June offers welcome news, experts agree that the pressures on businesses are far from over—and for many, the path to stability will depend on staying ahead of challenges before they escalate.
For now, companies are being advised to closely manage cash flow, review supplier relationships, and seek early guidance from advisers to avoid sliding toward insolvency in what remains a precarious economic environment.
Amy Ingham
Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.
