Insolvencies edge up in cautious July

New figures from the Insolvency Service show that corporate insolvencies increased by 1.4% to 2,081 cases compared to June’s total of 2,053, and by just 0.1% against July 2024’s figure of 2,078.

Bethan Evans, South West Chair of R3, the UK’s restructuring, turnaround and insolvency trade body, says: “Corporate insolvencies across England and Wales remained broadly stable last month, with the trends showing a rise in Compulsory Liquidations and a slight uptick in Administrations, while Creditors’ Voluntary Liquidations and Company Voluntary Arrangements fell. This pattern may suggest that fewer directors are choosing to close their companies voluntarily, whether because they are seeing improvements in trading conditions or are caught in a holding pattern, waiting to see where the economy may head next.

“Compulsory Liquidations were higher this July than compared to one and two years ago, as HMRC continues to take a more assertive stance towards enforcement, with greater appetite to recover unpaid taxes through the courts.

“The broader economic picture shows tentative signs of recovery. Following a weak April and May, when some spending may have been brought forward in anticipation of higher prices, economic activity picked up in June, helping Q2 GDP to grow by 0.3%. While this represents only modest growth, it is encouraging to see the economy moving forward rather than stalling.

“At the same time, a sense of caution remains widespread across the UK. Many firms are sitting at a crossroads, delaying major decisions until they see which way the economy moves. Directors are taking stock of their position and are assessing whether trading conditions are likely to improve and, in many cases, whether the cost-saving measures they may have already taken will be enough to keep their struggling business afloat.”

On the personal side, the Insolvency Service recorded a 1.8% monthly increase in insolvencies in July, rising to 10,515 compared to 10,328 in June, and up 0.3% on July 2024’s figure of 10,479.

Bethan, who is a partner at Menzies LLP, continues: “The slight yearly rise in personal insolvencies has been driven by an increase in Individual Voluntary Arrangements (IVAs). Breathing Space registrations also increased by 14% compared to this time last year, reaching their highest level in more than three years. This points to a growing number of people seeking temporary respite from creditor action, allowing them time to assess their options and plan their next steps.

“For households, the main pressure continues to come from higher day-to-day expenses. Pay increases are often absorbed by everyday essentials, leaving little room for people to build savings or manage unexpected expenses. That lack of headroom is leaving people vulnerable to even small changes in their circumstances.

“My message to businesses and individuals in the South West remains the same: seek advice at the first signs of financial distress. Taking action early gives you more options and more time to make a considered decision about how to move forward in the best way for your circumstances.”