The total number of registered business insolvencies in England and Wales rose to 2,048 in August, a 6% uptick from August 2024. In the first half of 2025, monthly company insolvencies were slightly higher than in 2024 and at a similar level to 2023, which saw a 30-year high annual number of insolvencies.
The rise in insolvency figures is surely a reflection of the escalation of challenges that businesses continue to face. Not least, the April increase in National Insurance contributions to 15% and higher minimum wage that has driven operating costs. Combined with the reduction in Business Rates Relief, this has exerted additional financial pressure on many SME’s.
For companies in industries that run on tight profit margins—such as retail, hospitality, and construction—the pressures are particularly severe.
- In retail, average net profit margins often hover around 2–3%, meaning even a modest rise in operating costs can erode profitability.
- The hospitality sector typically records margins of just 3–5%, leaving little room to absorb increases in wages, energy, or supply costs.
- Similarly, the construction industry operates on thin margins, generally in the range of 4–6%, while being highly exposed to fluctuations in material prices and labour shortages.
Given these already constrained conditions, additional financial or operational pressures—pose a significant risk to sustainability and growth.
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