A decrease in the monthly number of corporate insolvencies in England and Wales highlights tentative signs of recovery for the region, but business owners should prepare for significant economic challenges moving through the final quarter of 2025.
This is according to the Midlands branch of the UK’s restructuring, turnaround and insolvency trade body R3 and comes on the back of latest figures published by the Insolvency Service which show that corporate insolvencies decreased by 1.7% in August to a total of 2,048 compared to July’s total of 2,083.
R3 Midlands chair Stephen Rome, a partner at law firm Penningtons Manches Cooper in the region, said: “Corporate insolvencies may have decreased slightly in August, but we have a trend which shows continued high numbers of formal insolvencies, albeit way off the peaks of 2023 when pandemic-era problems unwound.
“While any drop in insolvency numbers is a welcome piece of news for many Midlands businesses, uncertainty in what is already a difficult trading environment remains the dominant theme across the region.
“The November Budget is already casting a long shadow, with widespread speculation about possible changes to business taxation, such as the bank surcharge and business rates. Until the details are known, it is challenging for local directors and investors to make investment, recruitment and expansion decisions.
“In addition, the well-documented problems Midlands businesses face because of inflationary pressures are coming to the fore once again. Higher costs for energy, materials and labour are eroding margins. Companies cannot always pass these increases onto consumers, many of whom are themselves reducing discretionary spending.
“Interest rate expectations are a further constraint. While businesses had hoped for meaningful reductions in the cost of borrowing this year, the expectation now is that rates will remain at their current level for some time, in part because of inflationary concerns. This keeps the cost of servicing debt higher and makes new borrowing for investment harder to justify.
“For any business owner concerned about their company’s finances, professional advice should be sought as soon as possible. Most R3 members will give prospective clients a free initial consultation to learn more about their situation and outline the potential options open to them to improve it.”
