More businesses forced to close in July as cost pressures mount

The number of companies going bust across England and Wales remained elevated last month, new data shows, as pressures intensify for firms grappling with higher costs.

Official data from the Insolvency Service showed there were 2,081 company insolvencies in July, edging up by 1% compared with June.

The number of compulsory liquidations was slightly higher than in June and up 11% compared with the same month in 2024.

Creditors

Compulsory liquidations happen when a company is forced to close when it cannot pay money owed to creditors.

July’s figure was also a quarter higher than the monthly average across 2024, the data showed.

The level of firms facing insolvency has remained elevated since reaching a 30-year annual high in 2023.

Construction firms continue to come under the most pressure, with 3,984 insolvencies in the 12 months to July – making up 17% of all cases.

This is followed by wholesale and retailers, who made up 16% of all company insolvencies.

‘Relentless uncertainty’

Experts said firms are being challenged by “relentless uncertainty” in the global economic environment.

Simon Edel, UK turnaround and restructuring strategy partner at EY-Parthenon, said: “Many businesses are also contending with higher costs including recent increases to employer national insurance contributions and the national living wage.

“With interest rates still relatively high – alongside significant working capital demands and a constrained credit environment – liquidity pressures are intensifying for more UK companies.

“This is causing more businesses and stakeholders to call time.”

Freddy Khalaschi, business recovery partner at Menzies, said: “The summer heat is bearing down on British businesses.

“Thames Water’s reserves are drying up, Claire’s has fallen into administration, River Island narrowly avoided the same fate after the court agreed a restructuring plan, and more than 1,000 pubs and restaurants have gone under since the last Budget.

“Consumer confidence remains fragile, house prices are falling and falling job vacancies suggest that businesses are cutting back, with hiring costs rising and with AI and automation starting to make their presence felt.”