The number of company insolvencies rose 7% month-on-month in March to 2,022, according to the Insolvency Service. This increase was particularly acute in the hospitality sector, where the number of accommodation and food service firms declaring insolvency jumped by 22% to 270 in February, based on Office of National Statistics data. In that same month, 254 food and beverage service businesses were forced to shut, including 171 restaurants and food trucks, and 64 pubs.
A detailed breakdown of insolvency types shows company administrations surged 52% between February and March to 235, and were 82% higher when compared with March 2025, the Insolvency Service reported. Compulsory liquidations jumped 18% in March, while company voluntary arrangements doubled during the month to 20. More than 100 connected companies in the real estate sector collapsed in March, according to the same source. In the hospitality sector specifically, 10 hotels shut in February while 16 accommodation firms collapsed in total in the month.
The hospitality sector is facing a deepening crisis, with more than 700 pubs having shut in each of the last three years, and the rate of closures having surged since 2022 when only 512 closed their doors. Two thirds of hospitality bosses say April tax rises will force them to cut jobs, though the exact number of jobs lost remains unknown. Smaller, independent businesses are struggling the most in the hospitality sector. Hotels and restaurants were excluded from the government's business rates relief package, which was offered only to pubs.
Chancellor Rachel Reeves offered a £300m emergency business rates relief package, but specific measures included and how many businesses have benefited so far have not been disclosed. The exclusion of hotels and restaurants from the package has left many in the sector without support.
Underlying causes of the insolvency surge include rising energy and fuel costs, which multiple reports indicate have been driven by the Iran war and are impacting businesses. Ceramics manufacturer Denby called in administrators late last month after struggling with rising costs, with sky-high energy prices said to be a key factor, according to major media sources. Fuel and transport costs are seen as a financial threat for many businesses, coming on top of big increases in wage bills, Kroll reported. The exact number of businesses that have collapsed directly due to the Iran war's impact remains unknown.
Contextually, the March insolvency level marks the highest since October 2025, although it is lower than the 2025 monthly average. This historical comparison underscores the severity of the current spike despite not reaching peak levels from the previous year.
Industry experts have issued stark warnings about the situation. Independent pubs and those which are off-grid are vulnerable to devastating energy bill hikes, UKHospitality reported. Fuel and transport costs are seen as a financial threat for many businesses, coming on top of big increases in wage bills, Kroll reported.
The implications are clear, with businesses being urged to put contingency plans in place. The projected timeline for when energy and fuel costs might stabilize or decrease for UK businesses remains uncertain, adding to the urgency for preparedness.