Business closures surge to their highest level since 2021

Business closures in the UK surged to their highest level since 2021, according to latest data for Quarter 1.

An analysis of insolvency notices in The Gazette shows that 382 notices of liquidation were published in January, 637 in February and 1,699 in March.  In total, 2,718 companies shut down between January and March 2025.

Last month was the second worst for insolvencies since Covid restrictions were lifted, beaten only by October 2024, when 2,701 businesses closed their doors in the same month as Chancellor Rachel Reeves’s Budget.

The new statistics come on the back of some 4,500 companies shutting down from October to December 2024, which marked the biggest quarterly increase in voluntary business closures since the Covid-19 lockdowns.

In further economic developments, the Bank of England has halved its own growth forecast from 1.5 per cent to 0.75 per cent, with industry leaders also expecting minimal growth.

The Office for Budget Responsibility (OBR) has also downgraded the expected growth rate for the 2025 financial year, which runs from April to March 2026, from 2 per cent to 1 per cent.

Commenting on the figures, Mark Goodwin, Founder and Managing Director at Optimise said:

“Businesses are facing the toxic combination of rising costs and taxes. 

“This month’s rise in employer NICs, together with the higher National Living Wage, could lead to job cuts and price rises in the months ahead.

“The impact of US tariffs is also significant, with 62% of UK firms with trade exposure to the US reporting negative effects, according to the British Chamber of Commerce.”

Continued Mark: “It is not going to take much more to push the UK economy over the line into contraction in the months ahead.

"With the economy firmly stuck in reverse gear and company insolvencies continuing to rise, there are numerous legitimate legal claims against former directors that might not be pursued due to lack of funds. Optimise is here to bridge this gap, ensuring that insolvency practitioners and creditor estates receive maximum returns. By providing the necessary funding, we help ensure that justice is served and creditors are fairly compensated."

Optimise is currently funding in excess of £10 million worth of live claims covering directors’ loan accounts, breach of contract, breach of duty, transactions at undervalue, preference, unlawful dividends, wrongful trading and claims against third parties.