The number of personal insolvencies in England and Wales surged to its highest level in 15 years in 2025, according to the latest figures from the Insolvency Service. A total of 126,240 individuals faced insolvency last year, marking a 7% increase compared to 2024. This uptick is the largest since the aftermath of the 2008 financial crisis, when figures reached 134,971.
The rise in insolvencies reflects broader financial struggles for many, particularly among households grappling with rising costs. The number of debt relief orders (DROs), a key form of insolvency, reached a new peak with 46,939 recorded, the highest since DROs were first introduced in 2009. This was in part due to changes in eligibility criteria and the removal of a £90 administrative fee in April 2024, which allowed more people to access the scheme.
Sector Strain and Business Insolvencies
While personal insolvencies rose, business insolvencies also remained concerning, with 23,938 company failures in 2025, consistent with 2024 levels. However, this was a 5% decrease compared to 2023, which saw the highest number of corporate insolvencies since 1993. The rise in company failures is attributed to ongoing cost pressures, including increased national insurance contributions, rising minimum wages, and the ongoing strain of inflationary pressures and high-interest rates.
The retail and construction industries were hit particularly hard, with many businesses struggling to adjust to new economic conditions. The retail sector, already battered by a difficult holiday season, faces further contraction in 2026, with smaller retailers transitioning to online models. Similarly, the construction industry continues to face unsustainable costs for materials and labor, making it difficult for companies to stay profitable.
For many businesses, particularly small and medium-sized enterprises (SMEs), access to funding will be crucial in preventing further failures. Industry experts have warned that without adequate financial support, more firms could face insolvency as they battle against rising operational costs and reduced consumer spending.
As the economic challenges persist, experts anticipate that the UK will continue to face a rocky financial landscape in 2026. The combination of high taxes, wage pressures, and continued global disruptions is expected to test both individuals and businesses as they attempt to navigate the ongoing financial uncertainty.
