Why Corporate Insolvencies Remained High in 2025 Despite Economic Stabilisation

At first glance, 2025 appeared to offer signs of economic stabilisation in the United Kingdom. Inflation eased compared to its post-pandemic peak, supply chain disruption reduced, and interest rates stopped rising as aggressively as in previous years. Yet despite these improvements, corporate insolvencies remained stubbornly high. Around 28,000 corporate insolvency events were recorded during the year, with particular pressure on businesses operating in retail, hospitality, and service sectors.

This apparent contradiction has raised an important question: why did insolvencies stay elevated even as wider economic conditions showed signs of recovery?

The answer lies in a combination of delayed financial stress, structural changes to consumer behaviour, rising operational costs, and the long-term effects of earlier government support measures ending.

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