Ongoing economic and geopolitical issues have pushed corporate insolvencies to a 2025 high, while rising numbers of local businesses are facing another tough month as a result of spiralling costs of materials, staff and energy as well as a rate of inflation above the Bank of England target.
This is according to the Midlands branch of the UK’s insolvency and restructuring trade body R3 and comes on the back of latest figures from the Insolvency Service which show that corporate insolvencies in England and Wales increased by 15% last month [May] to a total of 2,238 compared to May 2024’s figure of 1,946, and by 7.9% compared to April 2025’s figure of 2,074.
R3 Midlands chair Stephen Rome, a partner at law firm Penningtons Manches Cooper in the region, said: “The climate remains very tough for local businesses and we are seeing this reflected in the number of directors who are actively taking steps to wind up their companies, and the number of creditors pursuing the debts they are owed through the courts – led by HMRC, which is attempting to recover money for the public purse.
“April, in particular, was difficult for Midlands firms following the introduction of the new National Insurance and National Minimum Wage rates and the issues around US tariffs. The ensuing economic contraction that took place reflects the impact these and other issues had on businesses and the economy.
“Challenges like these do not go away overnight, and May was another tough month for Midlands companies, compounded by rising costs of materials, staff and energy, and inflation remaining above the Bank of England target.
“Looking at key sectors for the Midlands region, although latest industry figures show a rise in construction output, the sector still faces issues with margins, costs and payment.
“The retail and hospitality sectors have been affected by poor consumer spending over the past month and will be hoping for a long, hot summer to encourage people to go out and spend money.
“Many businesses in these sectors have reacted to the rise in wage costs by following the wider trend of freezing recruitment and not replacing people who have moved on to other jobs, and by cutting hours for casual staff where they can.
“R3’s message to anyone worried about the financial stability of their business is to seek professional advice as soon as concerns arise. It can be an incredibly hard conversation to have, but timely discussions with a qualified advisor may provide more options than waiting until a problem becomes more severe.
“Most R3 members will give prospective clients a free initial consultation so they can learn more about the issues they face and outline the potential options to resolve them.”
