Business Insolvencies Spike: A Rough New Chapter for UK Companies
The Insolvency Service’s latest figures paint a bullish‑but‑burbling picture: company insolvencies jumped 6% in the year ending January 2025 compared with the previous month, and climbed a hefty 11% on top of last year’s January total. It’s a sign that the recent Autumn Budget has left many UK firms rubbing their eyes, trying to shake off the financial dust.
December’s False Calm – January Throws a Reality Check
Giuseppe Parla, Business Recovery Director at Menzies, points out that December’s numbers were a bit of a mirage. The calm seemed to precede a storm.
“While December looked like a stable stop‑light, January brought a fresh wave of corporate insolvencies, proving that British business is still feeling the burn,” Parla says.
- Prices have risen 2.5% in the 12 months leading up to December.
- Businesses are tackling heftier tax bills.
- Recent tax hikes on business asset disposal relief (BADR) and capital gains tax (CGT) mean lower asset values and higher tax debts.
- All of this squeezes the pockets that businesses rely on.
Need for a Lending Lifeline?
Parla argues that the bank base rate cuts might be the silver bullet many firms have been waiting for. “It offers a chance to keep borrowing affordable,” he says. “But for many, that’s the final straw that could topple future continuity.” The upcoming Treasury Spring Forecast, he notes, will be the litmus test: can it steer the economy out of “doom and gloom” or will it keep rough waters rolling?
Act Now – Don’t Sit on the Sidelines
“As always, we urge companies to act early if they sense trouble, ensuring more options to secure a profitable path forward,” the expert advises.
For businesses drawing breath, this is a call‑to‑action: proactively consider restructuring options, negotiate with creditors, and explore the latest market instruments before the next wave of insolvencies hits.
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