The number of registered company insolvencies in the UK fell to 1,992 in March 2025, a decrease of 2% compared with February 2025, according to the latest official statistics for the first quarter.
Despite the marginal drop, business conditions remain challenging, with persistent inflation, global instability and domestic cost pressures creating a volatile environment for many firms.
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Stephen Goderski, Partner at restructuring and insolvency firm PKF Littlejohn Advisory, said the UK economy continued to grapple with both domestic and international pressures during the first quarter of the year. “The UK is facing a range of challenges, and the actions of an unpredictable US administration are adding to global uncertainty. This is pushing many businesses that rely on international trade to re-evaluate their credit and operational strategies,” he said.
Inflation remains a key concern. The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.4% in the 12 months to March 2025, down slightly from 3.7% in February. Goderski noted that while the easing is welcome, the broader economic picture remains fragile. “Businesses are under considerable pressure,” he said. “Inflation, increased employer National Insurance contributions, rising minimum wages and higher borrowing costs are all contributing to a demanding environment.”
Goderski cautioned that the fall in insolvencies should not be interpreted as a shift in trend. “While a reduction in insolvencies is positive, it may not reflect a broader improvement in economic conditions. Many companies remain vulnerable. Effective cash management is critical – that means ensuring customers pay on time and that every part of the business is operating efficiently,” he said.
He warned that weak credit control and delayed supplier payments can quickly lead to operational issues. “It’s a slippery slope. Boards must remain vigilant and ensure the fundamentals are in place.”
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By GlobalDataInvestment conditions also remain uncertain. “Uncertainty is the biggest risk, particularly for businesses seeking external funding. Boards must stay agile and keep options open,” he said. The long-term impact of the government’s economic strategy is not yet clear. “It remains to be seen whether current policies will generate stability and growth or whether we are heading toward a renewed downturn.”
Goderski advised businesses experiencing early signs of financial distress to act quickly. “Seeking professional advice at an early stage is essential. There may be opportunities to navigate through the turbulence, but contingency planning is equally important. Responsible boards will prepare for the worst while exploring the best possible outcomes.”
