London Daily

Focus on the big picture.
Friday, Aug 22, 2025

Business insolvencies at post-pandemic high as higher rates and energy costs add to inflation pain

Business insolvencies at post-pandemic high as higher rates and energy costs add to inflation pain

A 16% leap in the number of corporate insolvencies last month follows warnings from business groups that rising costs have become unbearable, with many firms choosing to throw in the towel.
The number of companies entering insolvency hit its highest level for more than three years in March, according to official figures.

Commentators blamed a combination of higher interest rates and wider inflation for the 16% increase recorded last month across England and Wales.

The Insolvency Service reported 2,457 corporate insolvencies - up from 1,784 in February.

The number was driven by creditors' voluntary liquidations, the body said.

The total has been creeping up since courts got back up to speed after the COVID pandemic.

But a growing number of firms have encountered intolerable difficulties since costs surged during the reopening of the economy, when associated government support programmes ended.

Bills have latterly been exacerbated by the effects of the war in Ukraine despite further, limited, aid for bills from the taxpayer.

Record costs for energy, for example, have contributed to price hikes right down the supply chain, not just for heating and lighting.

Higher taxes and employment costs are other drags for businesses to bear - on top of weaker demand from consumers and other businesses due to high inflation.

The data chimes with warnings from business groups that rising costs have become unbearable, particularly for many consumer-facing operators, with many firms choosing to throw in the towel rather than face financial ruin.

Perversely, action from the Bank of England to battle inflation makes their headwinds worse.

That is because interest rate hikes, aimed at easing inflationary pressures through slowing demand, are reflected in borrowing costs.

David Kelly, head of insolvency at accountants PwC, said: "Businesses are struggling to secure financing and pay off their loans due to high interest rates and the wider impact inflation and consumer sentiment is having on sales and cash flows."

"Company insolvencies will likely continue to rise in the short term, making for a challenging spring," he added.

PwC suggested some of the hardest-hit sectors, such as hospitality, would likely see pressures ease due to stronger sales as the weather improved.

The rate of inflation is also tipped to ease in the coming months, not only improving the cost headache but also the appetite for spending among consumers and businesses.

The latest employment data released earlier on Tuesday showed a rise in total wages to an annual rate of 5.9% in the three months to February.

The current rate of inflation stands at 10.4%.

However, economists polled by the Reuters news agency see the rate falling back to single digits when the data covering March is released on Wednesday.
Newsletter

Related Articles

0:00
0:00
Close
After 200,000 Orders in 2 Minutes: Xiaomi Accelerates Marketing in Europe
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
Finnish MP Dies by Suicide in Parliament Building
Outrage in the Tennis World After Jannik Sinner’s Withdrawal Storm
William and Kate Are Moving House – and the New Neighbors Were Evicted
Class Action Lawsuit Against Volkswagen: Steering Wheel Switches Cause Accidents
Taylor Swift on the Way to the Super Bowl? All the Clues Stirring Up Fans
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Apple Expands Social Media Presence in China With RedNote Account Ahead of iPhone 17 Launch
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Cambridge Dictionary Adds 'Skibidi,' 'Delulu,' and 'Tradwife' Amid Surge of Online Slang
Bill Barr Testifies No Evidence Implicated Trump in Epstein Case; DOJ Set to Release Records
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
The CEO Who Replaced 80% of Employees for the AI Revolution: "I Would Do It Again"
Emails Worth Billions: How Airlines Generate Huge Profits
Character.ai Bets on Future of AI Companionship
China Ramps Up Tax Crackdown on Overseas Investments
Japanese Office Furniture Maker Expands into Bomb Shelter Market
Intel Shares Surge on Possible U.S. Government Investment
Hurricane Erin Threatens U.S. East Coast with Dangerous Surf
EU Blocks Trade Statement Over Digital Rule Dispute
EU Sends Record Aid as Spain Battles Wildfires
JPMorgan Plans New Canary Wharf Tower
Zelenskyy and his allies say they will press Trump on security guarantees
Beijing is moving into gold and other assets, diversifying away from the dollar
Escalating Clashes in Serbia as Anti-Government Protests Spread Nationwide
The Drought in Britain and the Strange Request from the Government to Delete Old Emails
Category 5 Hurricane in the Caribbean: 'Catastrophic Storm' with Winds of 255 km/h
"No, Thanks": The Mathematical Genius Who Turned Down 1.5 Billion Dollars from Zuckerberg
The surprising hero, the ugly incident, and the criticism despite victory: "Liverpool’s defense exposed in full"
Digital Humans Move Beyond Sci-Fi: From Virtual DJs to AI Customer Agents
YouTube will start using AI to guess your age. If it’s wrong, you’ll have to prove it
×