Warning of potential sharp rise in insolvencies amid tariff turmoil

The number of companies in the UK filing for administration remained steady during Q1 2025 according to analysis by Interpath.

Interpath expects that insolvencies to rise sharply as businesses grapple with the impact of new US tariffs on their organisations and the wider economy.

Analysis of Companies House data by the international advisory firm shows there were 330 administrations in the first three months of the year. This represents a small increase when compared to the same period 12 months ago (Q1 2024: 321 cases) and marginally down, but still similar, when compared to the final quarter of 2024 (337).

A review of some of the largest cases over the past three months shows the broad spectrum of businesses heading into administration and the plethora of challenges they’ve faced – from petroleum wholesale Eninco Trading Services, which had suffered as a result of the war in Ukraine as supply chains came under pressure, to furniture manufacturing Belfield Group’s struggles amidst soft consumer spending and the administration of visual effects company Technicolour which had succumbed to rising labour costs and the impact of the Hollywood writer and actor strikes.

Commenting on the latest figures, Will Wright, CEO of Interpath in the UK, said “The latest insolvency figures reflect the period of relative stability we’ve had in the UK after a steady stream of administration cases over the past year. But now, economic protectionism means that the storm clouds are gathering after months of fair skies.

“The universal tariff imposed by the US has sent shockwaves round the globe and has knocked corporate confidence. Quite simply, UK plc is unnerved. We’ve already seen that come through in volatility in the markets. Together, this may mean that we see expansion plans put on ice and a reduction in capex and technology investment. Management teams are concerned by the effect these changes will have on their own trading and margins, but also the stability of supply chains and medium-to-longer term health and demand within economy.

“Unless the UK can ratify a bespoke deal quickly, we should expect a notable rise in administration levels in sectors such as industrial manufacturing and automotive through the summer ahead, with the indirect effects of the tariff hike to hit services further down the line. The timing couldn’t be tougher as so many businesses should be ramping up investment right now as we pass through a period of fundamental structural change in the economy which has been upended by the rapid emergence of AI.”

When it comes to sectors, the latest data shows that there’s been an even spread of administrations since the start of the year across retail (43 cases), building & construction (42), business services (42), and leisure & hospitality (29), which collectively have taken the lion’s share of appointments for some time.

On a regional basis, London continued to dominate cases and accounted for nearly a third of cases (32.7%), followed by the North West with more than a fifth of cases (22.7%), and the Midlands and North East each with 12.7% share of activity. Compared to the same quarter in 2024, distress appears to have spread across the country with London’s proportion of cases falling from 37.6%.

Wright added “In terms of the current administration picture, the data mirrors what we have seen on the ground. Business distress is not isolated to any one sector—it’s widespread, driven by challenges like rising labour costs following the latest changes to National Insurance Contributions and National Minimum Wage, soft trading, supply chain disruptions, and wafer-thin margins. Businesses have often been left with too little fat on the bones to be able to address issues that they would have, not long ago, confidently taken in their stride.”