{"id":200597,"date":"2025-06-20T19:01:23","date_gmt":"2025-06-20T19:01:23","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/200597\/"},"modified":"2025-06-20T19:01:23","modified_gmt":"2025-06-20T19:01:23","slug":"insolvencies-jump-as-rachel-reeves-labour-costs-hike-hits-businesses","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/200597\/","title":{"rendered":"Insolvencies jump as Rachel Reeves&#8217; labour costs hike hits businesses"},"content":{"rendered":"<ul class=\"mol-bullets-with-font\">\n<li class=\"\"><strong>The number of businesses folding rose 15% year-on-year in May\u00a0\u00a0<\/strong><\/li>\n<\/ul>\n<p class=\"author-section byline-plain\">By <a href=\"https:\/\/www.thisismoney.co.uk\/profile-711\/mike-sheen.html\" class=\"author\" target=\"_blank\" rel=\"noopener\">MIKE SHEEN<\/a> <a rel=\"nofollow noreferrer noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/intent\/follow?screen_name=michaeljsheen&amp;tw_p=followbutton\" class=\"twitter-follow-author\"><\/a> <\/p>\n<p class=\"byline-section\"> Updated:  07:34 EDT, 20 June 2025   <\/p>\n<p class=\"mol-para-with-font\">Business insolvencies across England and Wales rose sharply last month as firms buckled under the pressure of higher labour costs associated with last year&#8217;s <a style=\"font-weight: bold;\" target=\"_self\" href=\"https:\/\/www.thisismoney.co.uk\/money\/tax\/article-14019251\/Autumn-Budget-glance-Chancellor-Rachel-Reeves-reveals-tax-spending-plans.html\" id=\"mol-ebf38f80-4dc1-11f0-b418-bb2a29e5f6fd\" rel=\"noopener\">Autumn Budget<\/a>, official data suggests.<\/p>\n<p class=\"mol-para-with-font\">Insolvencies jumped 8 per cent month-on-month to 2,238 in May, reflecting a 15 per cent increase on the same time last year, according to the Government&#8217;s Insolvency Service.<\/p>\n<p class=\"mol-para-with-font\">It follows hikes to <a style=\"font-weight: bold;\" target=\"_blank\" class=\"\" href=\"https:\/\/www.thisismoney.co.uk\/money\/bills\/article-14019143\/Will-Budget-employer-national-insurance-hike-hit-wages-explain-means.html\" rel=\"noopener\">employer national insurance contributions<\/a> and the national living wage in the previous month, compounding the impact of lacklustre economic growth, high borrowing costs and fragile consumer confidence.<\/p>\n<p class=\"mol-para-with-font\">Mark Ford, partner in the restructuring and recovery team at consultant S&amp;W, said the &#8216;challenging operating environment&#8217; had &#8216;eroded cash reserves for businesses and left some in a perilous position&#8217;.<\/p>\n<p class=\"mol-para-with-font\">He added: &#8216;Businesses are now facing newer challenges that threaten their viability and this means we are likely to continue to see a steady stream of company insolvencies in the coming months.&#8217;<\/p>\n<p>   <img decoding=\"async\" id=\"i-c26090f73658e209\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/06\/99566317-14831603-image-a-6_1750418544164.jpg\" height=\"415\" width=\"634\" alt=\"April saw firms shouldered with higher labour costs after hikes to employer national insurance contributions and the national living wage\" class=\"blkBorder img-share\" style=\"max-width:100%\" loading=\"lazy\" \/>   <\/p>\n<p class=\"imageCaption\">April saw firms shouldered with higher labour costs after hikes to employer national insurance contributions and the national living wage<\/p>\n<p class=\"mol-para-with-font\">Insolvency growth in May was driven by 1,734 creditors&#8217; voluntary liquidations, where company directors choose to shut a business down.<\/p>\n<p class=\"mol-para-with-font\">The Insolvency Service recorded 354 compulsory liquidations, but this was down 7 per cent on April&#8217;s 10-year high.<\/p>\n<p class=\"mol-para-with-font\">Giuseppe Parla, restructuring and insolvency director at Menzies, identified construction, wholesale and retail trade, and hospitality as sectors that will continue to struggle against higher costs.<\/p>\n<p class=\"mol-para-with-font\">He added: &#8216;Whilst <a style=\"font-weight: bold;\" target=\"_self\" href=\"https:\/\/www.thisismoney.co.uk\/money\/mortgageshome\/article-11885727\/When-rates-start-fall-Base-rate-forecasts.html\" id=\"mol-ebf3dda0-4dc1-11f0-b418-bb2a29e5f6fd\" rel=\"noopener\">interest rates<\/a> may <a style=\"font-weight: bold;\" target=\"_self\" class=\"\" href=\"https:\/\/www.thisismoney.co.uk\/money\/comment\/article-14829721\/The-Bank-England-never-misses-opportunity-miss-opportunity-says-ALEX-BRUMMER.html\" rel=\"noopener\">come down further later <\/a>in the year, stability for our economy seems to be what is required, but how easy will that be to achieve?&#8217;<\/p>\n<p class=\"mol-para-with-font\">The Insolvency Service also recorded 136 company administrations, which are a recovery procedure often used by larger entities to ensure a better outcome for creditors.<\/p>\n<p class=\"mol-para-with-font\">David Hudson, restructuring advisory partner at FRP, said the &#8216;quiet, but steady&#8217; rise in administrations is &#8216;particularly concerning&#8217;.<\/p>\n<p class=\"mol-para-with-font\">He said: &#8216;These usually involve the very largest businesses and so could prompt a significant knock-on impact in terms of jobs and supply chains if they continue to rise.<\/p>\n<p class=\"mol-para-with-font\">&#8216;It&#8217;s also an early signal that financial distress is deepening \u2013 not just among smaller businesses, but at the top end of the market too.&#8217;<\/p>\n<p>   <img decoding=\"async\" id=\"i-e5f8fc64b8f7e98a\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/06\/99565089-14831603-image-a-21_1750415915925.jpg\" height=\"415\" width=\"634\" alt=\"Insolvencies have risen sharply since lockdown measures were removed\" class=\"blkBorder img-share\" style=\"max-width:100%\" loading=\"lazy\" \/>   <\/p>\n<p class=\"imageCaption\">Insolvencies have risen sharply since lockdown measures were removed<\/p>\n<p>DIY INVESTING PLATFORMS<img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/06\/1750446080_965_A J Bell 2022_122X84.png\" alt=\"Easy investing and ready-made portfolios\" \/>AJ Bell<img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/06\/1750446080_965_A J Bell 2022_122X84.png\" alt=\"Easy investing and ready-made portfolios\" \/>AJ Bell<\/p>\n<p>Easy investing and ready-made portfolios<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/04\/HL-Logo_122x84.jpg\" alt=\"Free fund dealing and investment ideas\" \/>Hargreaves Lansdown<img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/04\/HL-Logo_122x84.jpg\" alt=\"Free fund dealing and investment ideas\" \/>Hargreaves Lansdown<\/p>\n<p>Free fund dealing and investment ideas<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/04\/ii_thisismoney_122x84.png\" alt=\"Flat-fee investing from \u00a34.99 per month\" \/>interactive investor<img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/04\/ii_thisismoney_122x84.png\" alt=\"Flat-fee investing from \u00a34.99 per month\" \/>interactive investor<\/p>\n<p>Flat-fee investing from \u00a34.99 per month<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/06\/1750446082_44_122x84 Blue.png\" alt=\"Account and trading fee-free ETF investing\" \/>InvestEngine<img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/06\/1750446082_44_122x84 Blue.png\" alt=\"Account and trading fee-free ETF investing\" \/>InvestEngine<\/p>\n<p>Account and trading fee-free ETF investing<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/06\/1750446082_71_T212Logo_Icon_130x90.png\n\" alt=\"Free share dealing and no account fee\" \/>Trading 212<img decoding=\"async\" src=\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/06\/1750446082_71_T212Logo_Icon_130x90.png\n\" alt=\"Free share dealing and no account fee\" \/>Trading 212<\/p>\n<p>Free share dealing and no account fee<\/p>\n<p class=\"tim-affiliate-text\">Affiliate links: If you take out a product This is Money may earn a commission. 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This does not affect our editorial independence.<\/p>\n<p><a href=\"https:\/\/www.thisismoney.co.uk\/money\/diyinvesting\/article-1718291\/Pick-best-cheapest-investment-Isa-platform.html?ico=tim-affiliate_desktop_bottom-link-click\" target=\"_blank\" class=\"optional-btn-wrapper\" rel=\"noopener\">Compare the best investing account for you <\/a><\/p>\n<p>                    Share or comment on this article:<br \/>\n                        Insolvencies jump as Rachel Reeves&#8217; labour costs hike hits businesses<\/p>\n<p>        <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n","protected":false},"excerpt":{"rendered":"The number of businesses folding rose 15% year-on-year in May\u00a0\u00a0 By MIKE SHEEN Updated: 07:34 EDT, 20 June&hellip;\n","protected":false},"author":2,"featured_media":200598,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,1700,1232,1284,1283,16,15],"class_list":{"0":"post-200597","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-money","11":"tag-moneymarkets","12":"tag-thisismoney","13":"tag-uk","14":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114717241508499141","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/200597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=200597"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/200597\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/200598"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=200597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=200597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=200597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}