Businesses on the brink: Company closures surge amid fears over UK economy
Businesses across Britain are being shut down at a rate not seen since the financial crash, City AM has found, in a major warning sign for the health of the UK economy.
More than 1,100 companies have faced winding-up orders in the first fifteen weeks of 2025, according to an analysis of published insolvency notices compiled by City AM, an increase of nearly a quarter compared to last year and the fastest rate of corporate closure since 2010. Nearly 2,200 businesses have also faced winding-up petitions, a legal manoeuvre by creditors to claw back unpaid debts, an increase of more than a fifth since 2024 and the highest rate since 2012.
The figures highlight the precarious position many small and medium-sized companies find themselves in as they struggle to pay off debts under the burdens of tax hikes, higher wage bills and sluggish growth.
Responding to official corporate insolvency figures, Tom Russell, Vice President of insolvency and restructuring trade body R3, said “a number of economic and political issues” were continuing to pile pressure on businesses, affecting firms across the supply chain.
“High costs and cautious consumer and client spending mean creditors are being more aggressive about pursuing the money they are owed and aren’t afraid to turn to the courts to recover outstanding debts, while a large proportion of directors of insolvent businesses feel closure is the only option open to them after years of trading through tough conditions and with little hope of these improving.”
Retail and hospitality on the front line
Over one in ten of the more than 300 companies facing winding-up petitions so far in April alone were retail and hospitality businesses, the analysis found, in signs high street businesses were being crippled by rises to employer taxes unveiled in Chancellor Rachel Reeves’ Autumn Budget.
Last month the Office for Budget Responsibility slashed its growth forecast for the UK in 2025 from 2 per cent to 1 per cent, as it raised its expectations for rates of unemployment. Some major banks have upped predictions for the chances of a global recession this year to as high as 60 per cent, as uncertainty over US tariffs sparks a slowdown in global trade.
Shadow Business Secretary Andrew Griffith told City AM: “With a government which is engaged in a tax and culture war against wealth creators, it is no surprise that businesses are being wound up at the fastest rate for a decade.
“The government needs to take urgent steps to reverse this, starting with shelving the damaging union-inspired Employment Rights Bill which will only make things worse.”
A Treasury spokesperson told City AM: “The last few years have been incredibly difficult for business. That’s why this pro-business government is determined to improve the total business environment.
“We know the vital importance of businesses to our economy which is why we are focused on creating opportunities for businesses to compete and access the finance they need to scale, export and break into new markets.”