August’s data reveals more than 2,000 firms in England and Wales went under, a sign that cost pressures, slow payments and tighter finance are still squeezing SMEs. Ed Rimmer, CEO of Time Finance, argues that policymakers and lenders must act to prevent today’s distress from turning into lasting damage for the UK economy.
The Government’s latest company insolvency statistics reveal an uncomfortable truth: business failures in the UK are not easing. In August 2025, 2,048 registered company insolvencies were recorded in England and Wales. That’s 6% higher than August 2024 and only slightly down on July 2025. Across the first eight months of this year, insolvencies have been running above 2024 levels and, more worryingly, at a similar pace to 2023 – a year that marked a 30-year high in annual insolvencies.
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The detail behind these numbers paints a telling picture. Creditors’ voluntary liquidations remain by far the most common type of insolvency, reflecting the fact that many directors are opting to close their businesses rather than struggle on. Compulsory liquidations are higher than the 2024 monthly average. Administrations are down, while company voluntary arrangements have risen slightly. These patterns point to financial distress that is still working its way through the economy.
On a 12-month rolling basis, the insolvency rate has dipped – from 55.5 per 10,000 companies in the year to August 2024 to 52.6 in the year to August 2025. But this can be misleading. The number of active companies on the register has more than doubled over the past decade, so even a lower rate masks a high absolute number of businesses closing their doors.
For small and medium-sized enterprises, the backdrop is especially difficult. They face higher costs, slower payments from customers and a tighter lending environment. While some insolvencies are inevitable, many firms that are fundamentally viable still fail because they lack access to the finance or support they need to navigate short-term shocks.
That matters not just to the companies themselves but to jobs, supply chains and regional economies. Every insolvency ripples out to suppliers, landlords and local communities. The UK economy relies heavily on SMEs for employment and innovation, so these numbers should concern us all.
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By GlobalDataPolicymakers need to look beyond the headline rates and understand the pressures on businesses beneath them. Measures that improve payment practices, provide targeted relief on business costs, or encourage more diverse sources of finance could make a difference. Equally, lenders have a role to play in offering flexible, tailored support to help viable firms weather difficult periods rather than default.
The August data is a reminder that the UK’s insolvency challenge has not gone away with the pandemic. It’s a structural issue born of persistent cost pressures and a changing financial landscape. If we want more companies to survive and thrive, government, lenders and the business community will need to work together to ensure that distress today does not become long-term economic scarring.
