There were 1,946 corporate insolvencies in August, 0.6% more than in July (1,934) and 3% less than in August 2025 (2,007).
Rob Young, a restructuring and insolvency partner at Azets, the UK top 10 accountancy and advisory firm with Kent offices in Maidstone, Ashford, Canterbury, Tunbridge Wells and Sidcup, explains why.
“Corporate insolvency numbers hit a four-month high in August, driven by a rise in administrations as more than 250 connected companies in the real estate sector entered administration between March and August of this year.
“August also saw an uptick in Compulsory Liquidations, as creditors continue to chase down debt in an attempt to balance their own books and HMRC continues to pursue tax debts to recover money for the public purse.
“While the rise in numbers can be explained, there’s no denying it was a summer of sorrow for many firms as ongoing and long-running cost issues and uncertainty caused by the political and geopolitical climate met the heatwave and – for certain sectors – resulted in fewer customers, a drop in sales and an increase in the cost of keeping buildings, customers and staff cool from the heat.
“The summer also saw a number of big names enter insolvency processes and announce store or site closures, with TG Jones and the Beefeater just two examples of British brands that were once a staple of everyday life cutting their presence on high streets and disappearing from towns and roadsides, and big names like Aston Martin showing signs of struggle.
“The cost-of-living issues are now starting to take their toll on higher earners and this is hitting higher-end brands which had avoided its effects to date. With inflation, living and energy costs increasing and wage rises often struggling to keep pace, those on higher incomes are now likely to start shopping around and watching their outgoings more closely than they ever have, which will have an impact on premium brands in a way it hasn’t until now.
“From a sector perspective, retailers saw a monthly fall in sales and while volumes are up year-on-year, falling margins and rising costs – especially employment taxes – mean that this isn’t the good news retailers were hoping for and sorely needed.
“The construction industry continues to suffer from a lack of new work and rising material and wage costs carry on eroding margins and leave contracts agreed in better times walking a fine line between profitable and lossmaking. For firms in this industry, whose profits have always been slim, these cost increases are pushing them closer towards financial distress.
“The hospitality industry has been hit hard by the hot weather as people stayed at home and hid from the heat in a month which is normally ripe for going out and spending money.
“With cooler weather expected, it will be interesting to see whether consumers get back into the habit of going out – and if they don’t, that could create further problems for a sector that’s struggling and which hoped the summer might provide a much-needed revenue boost to help pay for the increased costs of wages, energy bills and trading.
“Firms will also be keeping a watchful eye on rumours about next month’s Budget. Years of increased expenses combined with the wage, tax and Business Rates increases announced in the 2024 and 2025 Budgets have hit profits, growth and recruitment.
“With little time to prepare for Budget announcements taking effect, businesses will be hoping the Chancellor spares them from any further increases in costs as many have seen profits erode to a point of unsustainability.
“Our advice for anyone who is worried about their business is simple: pick up the phone and speak to an advisor. It is an incredibly difficult conversation to have, but seeking advice about your concerns gives you more options, more time to take a decision and a better chance of turning your situation around than if you’d waited until the issues became more severe and the window for decision making became shorter.”
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