UK insolvencies remained steady last month, according to the latest government figures, with the construction, wholesale and hospitality sectors continuing to see some of the highest insolvency levels.
The number of registered company insolvencies in England and Wales during July 2025 was 2,081, showing a slight increase from 2,053 in June 2025 and a marginal year-on-year increase from 2,078 in July 2024.
While higher than the figures seen during the second half of 2024, monthly insolvency statistics during the first seven months of 2025 have been lower than the 30-year-annual high recorded in 2023. Furthermore, in the 12 months to July 2025, the rate of company insolvencies was lower than in the 12 month period ending July 2024.
During the year to June 2025, the construction sector continued to see the highest level of insolvencies, with 3,984 during the period - 17 per cent of total cases. This was followed by wholesale and retail trade; repair of motor vehicles and motorcycles (3,655 insolvencies, 16 per cent of cases) and accommodation and food service activities (3,366 insolvencies, 14 per cent of cases).
Other industries to see high insolvency levels included administrative and support service activities (2,433, 10 per cent of cases), manufacturing (1,953, 8 per cent) and professional, scientific and technical activities (1,946, 8 per cent).
Kelly Boorman, National Head of Construction at RSM UK, noted that the figures demonstrated the challenging environment that the construction sector continues to face, “despite the government’s focus on housebuilding and infrastructure.”
While noting that a drop in interest rates could ease the debt burden for SMEs and improve funding access, Boorman cautioned that this could also lead to overtrading if firms are able to deliver enlarged pipelines of work, increasing the risk of strain on supply chains.
She continued: “Businesses continue to grapple with rising costs, including inflationary pressures and higher National Insurance Contributions, without the flexibility to pass these costs on. As a result, the supply chain may tighten further, leaving businesses on the backfoot.”
Boorman added that the sector could see an uptick in M&A activity as companies seek to capitalise on increasing project volumes and ensure they have the necessary labour, materials and supply continuity. However, she noted, this could result in workforce migration and increasing instability for smaller firms as a result of “a squeeze on labour and rising wage pressures.”
Boorman concluded by discussing speculation about the introduction of a four-day working week in the construction sector, which has been suggested as a method of improving productivity and attracting new talent.
However, Boorman asserted that ongoing constraints mean that this “remains more of a pipe dream than a practical solution”, adding: “This reinforces the importance of the construction industry forming strategic partnerships to support the funding and adoption of new technologies to drive efficiency and reduce the risk of insolvency.”
Read more about M&A trends in construction and related sectors:
Building products & services sees record increase in M&A
UK civil engineering sector riding tailwinds of change
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