Giuseppe Parla, Restructuring & Insolvency Director at Menzies LLP, warns that the Chancellor’s summer breaks risk drying up UK service sectors amid mounting financial pressures:

“Below the surface of an improving economy, we have a less confident consumer base, tax rises that have just come into force and an abrupt end to Covid-era relief. Around 40,000 businesses are still waiting on VOA appeals against rates assessments, some for close to a year, overpaying rates that just one in four will eventually get reduced. For businesses with unsuccessful appeals, this bill on top of rising employment, energy and borrowing costs risks pushing cash flow past breaking point. For many, this wait alone is the difference between survival and insolvency.”

“Persistent geopolitical tensions in the Middle East are compounding these issues, driving inflation and disruptions across supply chains, energy and fuel prices. For businesses already managing tight margins, these are pressures that are becoming increasingly difficult to absorb which poses a significant threat for the British economy and further elevations in company insolvencies.”

“Our message to businesses is clear: act early if you’re anticipating financial difficulty. Taking expert advice at the first sign of pressure ensures more options are available to help resolve issues, protect value, and secure long-term financial stability.”

Giuseppe Parla, Restructuring & Insolvency Director at Menzies LLP, says the rise in insolvencies in April is being driven by mounting pressure on business rates alongside persistent geopolitical uncertainty, and with neither showing signs of easing, more British businesses are likely to follow:

“Below the surface of an improving economy, we have a less confident consumer base, tax rises that have just come into force and an abrupt end to Covid-era relief. Around 40,000 businesses are still waiting on VOA appeals against rates assessments, some for close to a year, overpaying rates that just one in four will eventually get reduced. For businesses with unsuccessful appeals, this bill on top of rising employment, energy and borrowing costs risks pushing cash flow past breaking point. For many, this wait alone is the difference between survival and insolvency.”

“Persistent geopolitical tensions in the Middle East are compounding these issues, driving inflation and disruptions across supply chains, energy and fuel prices. For businesses already managing tight margins, these are pressures that are becoming increasingly difficult to absorb which poses a significant threat for the British economy and further elevations in company insolvencies.”

“Our message to businesses is clear: act early if you’re anticipating financial difficulty. Taking expert advice at the first sign of pressure ensures more options are available to help resolve issues, protect value, and secure long-term financial stability.”

March 2026 commentary:

Insolvencies rose this month to 2,022, an increase of 7% from February, but similar to March 2025 levels.

April marks the introduction of a range of tax changes that will affect all of us in the 2026/27 tax year. While some of these increases may appear modest at first glance, their true impact is likely to be felt over a period of time because of fiscal drag.

Giuseppe Parla, Restructuring and Insolvency Director at Menzies LLP, says the fall in insolvencies offers little comfort as a deepening geopolitical crisis and rising tax burden combine to push more businesses toward financial difficulty.

“The geopolitical backdrop remains one of the most significant threats to UK business stability. Ongoing tensions in the Middle East continue to drive up energy and fuel costs, disrupt supply chains, and keep inflation stubbornly above the Bank of England’s 2% target. The UK economy is expected to be among the most exposed in the developed world – and much of this impact is yet to filter through to company balance sheets or be reflected in insolvency data.

Compounding this, the new tax year has brought a fresh wave of cost pressures. While there have been no headline rate rises, frozen thresholds, reduced reliefs and tighter allowances are quietly intensifying ‘fiscal drag’ – steadily increasing the tax burden on both businesses and consumers. Together, these twin pressures continue to squeeze margins and suppress demand, and risk driving more businesses into the red.

A fall in insolvency numbers this month should not be mistaken for the all-clear. We are likely still climbing the mountain rather than descending from its peak. With cost pressures still building, consumer demand under strain, and uncertainty persisting, this month’s figures may prove to be a brief plateau rather than a sustained decline – and insolvency numbers could yet rise further in the months ahead.”