Industries Most Affected by Insolvency
The industries most affected by insolvency in 2025 are facing a perfect storm of financial pressures.
From rising costs and reduced consumer demand to labour shortages and late payments, thousands of UK businesses are struggling to stay solvent.
According to the latest data from the Insolvency Service (January 2025), five key sectors have recorded the highest number of company insolvencies over the past 12 months.
At Business Helpline, we’re seeing these trends reflected in the volume and urgency of calls from company directors across the UK.
In this article, we’ll explore:
- Which industries are currently seeing the most insolvencies
- Why these sectors are particularly vulnerable
- What directors can do if they’re at risk of company closure
1. Construction
4,031 insolvencies | 17% of all known industry cases
The construction industry remains the most affected sector, accounting for 17% of all company insolvencies where the industry was known.
Key Factors
- Skyrocketing material and labour costs
- Chronic late payments across supply chains
- Project delays due to planning restrictions and reduced lending
Construction businesses, especially small contractors and tradespeople, are being hit hard by cashflow volatility.
Many directors report using personal funds or short-term borrowing to keep projects going — often at the expense of long-term viability.
Business Helpline insight:
Construction companies are often highly skilled operationally but lack the cash reserves to absorb external shocks.
Delays in payment from main contractors can trigger insolvency within weeks.
2. Wholesale and Retail Trade; Repair of Motor Vehicles
3,631 insolvencies | 15% of all known industry cases
The retail and wholesale sector, including vehicle sales and repair, continues to struggle as reduced consumer spending and high overheads take their toll.
Key Factors
- Decline in discretionary spending due to cost-of-living pressures
- High business rates, especially for bricks-and-mortar premises
- Overstocking and warehousing issues for ecommerce firms
From high street shops to online sellers and car dealerships, directors are finding it increasingly difficult to maintain profitability in a saturated and unpredictable market.
Business Helpline insight:
Many directors in this space operate on tight margins and rely heavily on seasonal trade. When footfall drops or delivery costs increase, the financial impact is immediate.
3. Accommodation and Food Service Activities
3,474 insolvencies | 15% of all known industry cases
Restaurants, pubs, cafés, takeaways, and small hotels are among the most affected businesses in 2025, continuing a pattern of struggle since the pandemic.
Key Factors
- Rising supplier and utility costs
- Labour shortages and increased wage demands
- Inflexible commercial leases and rent arrears
These businesses often rely on high volumes to stay afloat, but consumer habits have shifted. Directors report declining bookings, reduced average spends, and growing pressure from creditors.
Business Helpline insight:
Many directors in hospitality delay taking action due to emotional ties to the business and loyalty to staff.
But once VAT and PAYE arrears build up, the situation can escalate quickly.
4. Administrative and Support Service Activities
2,389 insolvencies | 10% of all known industry cases
This sector includes cleaning companies, recruitment agencies, call centres, office support, security services and more.
It is often dependent on the health of other industries, making it vulnerable in a downturn.
Key Factors
- Reduced outsourced budgets from client firms
- High staff costs and office space overheads
- Contract cancellations or delays without warning
Support service companies frequently operate on rolling contracts or short-term agreements, leaving directors with little time to react when business drops off.
Business Helpline insight:
Many directors in this space believe they can trade through the downturn, but when contracts are paused or unpaid, they find themselves unable to cover payroll or tax obligations.
5. Manufacturing
1,962 insolvencies | 8% of all known industry cases
Manufacturers are being squeezed by rising input costs and unstable order volumes.
While some larger firms can absorb the impact, smaller manufacturers are struggling to maintain profitability.
Key Factors
- Higher energy costs and raw material prices
- Supply chain disruption and shipping delays
- Difficulty passing cost increases to customers
This sector also faces significant capital investment requirements, meaning many directors are left with expensive assets they can no longer afford to maintain or operate.
Business Helpline insight:
We’re speaking to manufacturers across the UK who are fulfilling contracts at a loss.
When credit facilities and supplier relationships begin to falter, insolvency is often the only remaining option.
What’s Behind the Industries Most Affected by Insolvency in 2025?
It’s important to note that these insolvency statistics do not necessarily reflect which sectors are most vulnerable in terms of proportion — but rather, where the largest volumes of insolvencies are being recorded.
In all five industries outlined above, we’re seeing:
- Directors under increasing personal and emotional pressure
- Businesses accumulating tax and supplier debts faster than income
- A growing number of directors using personal funds to delay the inevitable
The decision to close a company is never easy — but delaying action often limits your options.
What Directors in These Affected Industries Need to Know
If your company is in financial difficulty, you’re not alone.
The industries most affected by insolvency in 2025 represent thousands of directors just like you — many of whom have already sought advice, taken action, and started rebuilding.
You may still have options:
- A Creditors Voluntary Liquidation (CVL) can allow you to close your company in a structured and compliant way
- If your company is still solvent but no longer viable, a Members Voluntary Liquidation (MVL) could be a tax-efficient exit route
- We can support you in navigating HMRC debts, unpaid Bounce Back Loans, and creditor negotiations
Our team at Business Helpline provides clear, unbiased advice with no pressure or obligation.
How to Get Help if Your Industry is Affected by Insolvency in 2025
If you operate in one of the industries listed in this article and are worried about the future of your business, it’s important to act early.
Our support is:
- Free and confidential
- Delivered by licensed professionals
- Available 24/7 via phone or live chat
We understand how isolating financial pressure can feel. You are not alone, and we’re here to guide you through your next steps — whatever they may be.
Call our free 24/7 helpline on 0800 088 2142
Or start a live chat now
