Britain's Businesses On The Brink: More Than 2,000 Firms Collapse In A Month After Reeves' Tax Raid

The shutters are falling fast across Britain's high streets. In July alone, 2,081 companies in England and Wales went under—a stark reminder that the nation's businesses are buckling under unprecedented financial pressure.

From corner pubs to construction firms, the casualties mount daily as Chancellor Rachel Reeves' controversial tax policies collide with an already fragile economy.

Official data from the Insolvency Service reveals that July's collapse rate mirrors June's 2,053 failures and last year's July figure of 2,078, suggesting a persistent crisis rather than a temporary blip. Monthly insolvency levels throughout the first seven months of 2025 have consistently exceeded those of late 2024, hovering just below the 2023 peak, which was the highest in three decades.

A Surge in Insolvencies

According to official data, England and Wales recorded 2,081 registered company insolvencies, a figure broadly in line with the total of 2,053 reported in June and the 2,078 cases reported in July 2024.

Monthly insolvency levels across the first seven months of 2025 were consistently higher than in late 2024, though still slightly below the record annual peak seen in 2023, marking the highest in three decades. Within this trend, the number of compulsory liquidations also increased, indicating mounting financial pressure across multiple sectors.

This spike comes amid broader concerns that Reeves' October 2024 Budget, featuring steep tax hikes, may be contributing to rising business failures. Insolvencies in the first half of 2024 were 25 per cent higher than the same period in 2023, and overall levels remain elevated after hitting a 30-year high last year.

Reeves' Budget: A Tipping Point?

The Chancellor's Budget included several controversial changes:

• Employer National Insurance Contributions rose from 13.8 per cent to 15 per cent, with the threshold lowered to £5,000 in annual earnings.
• The National Living Wage increased by 77p to £12.21 per hour, adding pressure to labour-intensive industries.
• Capital Gains Tax on business asset sales was raised, further tightening margins for entrepreneurs.

Retailers, hospitality firms, and construction companies have been among the most severely impacted by the recent wave of business failures. According to figures cited by the Daily Mail, construction firms accounted for 17 per cent of all company insolvencies in the 12 months to July, making them the most affected sector.

Wholesale and retail businesses followed closely, representing 16% of insolvencies over the same period. The report highlights how rising costs, tax pressures, and economic uncertainty have created a 'perfect storm' for these industries..

Simon Edel, restructuring partner at EY-Parthenon, warned: 'With interest rates still relatively high, alongside significant working capital demands and a constrained credit environment, liquidity pressures are intensifying for more UK companies.

'This is causing more businesses and stakeholders to call time.'

Freddy Khalastchi, business recovery partner at Menzies, also highlighted the mounting strain on UK businesses as economic pressures intensify: 'The summer heat is bearing down on British businesses.'

'Thames Water's reserves are drying up, Claire's has fallen into administration, River Island narrowly avoided the same fate after the court agreed a restructuring plan, and more than 1,000 pubs and restaurants have gone under since the last Budget.

'Consumer confidence remains fragile, house prices are falling, and falling job vacancies suggest that businesses are cutting back, with hiring costs rising and with AI and automation starting to make their presence felt.'

His remarks underscore a broader trend of financial distress, with sectors ranging from retail to hospitality facing rising costs, declining demand, and structural shifts driven by technological advancements.

High Street Havoc

The impact on Britain's high streets has been stark. More than 1,000 pubs and restaurants have closed since the Budget, and store closures are projected to reach 17,350 by year-end, marking the highest number since records began in 2015.

Major retailers have either filed for administration or announced mass closures. A Beales store in Poole even held a 'Rachel Reeves Closing Down Sale' in April, underscoring the political backlash.

Theo Paphitis, entrepreneur and Dragons' Den investor, warned that high streets won't survive if shops are hit with further tax hikes in the autumn.

Broader Economic Strain

The crisis extends beyond retail. A report from Begbies Traynor found that 49,309 businesses are now in 'critical financial distress', representing a 21.4 per cent year-on-year increase. Hospitality firms experienced a 41.7 per cent rise in severe financial trouble, while the travel and retail sectors reported increases of 39 per cent and 17.8 per cent, respectively.

Martin Sartorius, principal economist at the Confederation of British Industry (CBI), noted: 'Firms reported that elevated price pressures, driven by rising labour costs and economic uncertainty, continue to weigh on household demand.'

Political Pressure Mounts

Business leaders and industry groups are urging the Treasury to reconsider its approach. The British Beer and Pub Association called the closures 'absolutely heartbreaking' and demanded reforms to business rates and beer duty.

Emma McClarkin, the association's chief executive, said: 'There is a direct link between pubs closing for good and the huge jump in costs they have just endured.'

Meanwhile, the Federation of Small Businesses warned that SME confidence is at a record low, with many businesses preparing to make job cuts or freeze hiring altogether. Unless the Treasury pivots on tax and regulatory policy, experts fear Britain's corporate collapse will worsen into the autumn.