Insolvencies In East Anglia rise again: R3’s latest health check

While insolvency activity overall dipped slightly from the record levels seen in 2024, East Anglia actually reporting a 1.7 per cent increase in activity.

The report, supported by comprehensive data from CreditSafe, looks back on 2025 and paints a picture of an economy still grappling with the long tail of post pandemic disruption, high borrowing costs, stubborn inflation, and cautious consumer sentiment.

For business leaders, investors, and advisers, the findings highlight a marketplace where resilience is in short supply and operational pressures remain acute.

Slight relief overall, but fragility remains

In 2025, total insolvency related activity – which includes liquidator and administrator appointments and creditors’ meetings – fell by 2 per cent year on year to 28,616 cases, down from 29,104 in 2024. While any decline offers a measure of relief, R3 stresses that current volumes remain well above pre pandemic norms.

The continuing high level of business distress reflects the cumulative impact of several years of elevated costs and unpredictable market conditions. Despite easing inflationary pressures and early signs of interest rate reductions entering 2026, many businesses continue to operate in survival mode.

Sector breakdown: construction leads, services under pressure

The construction industry again accounted for the largest number of insolvencies, recording 4,584 cases, a 6 per cent reduction from 2024 but still the highest of any sector. The report notes its exposure to rising input costs, delayed client payments, ongoing skills shortages, and weak investor appetite. The combination of these factors will have left many firms with nowhere to go.

Wholesale and retail posted 4,124 insolvencies, closely followed by accommodation and food services with 3,831 cases. Both sectors suffered as households reined in discretionary spending and businesses struggled to manage higher wage, energy, and supply chain costs. While insolvencies in these sectors fell slightly year on year, activity remains elevated and margins tight.

Manufacturing recorded 2,188 insolvencies, a historically high level driven by energy price exposure, lingering supply chain disruptions, and subdued export demand in a weaker global trading environment. Professional services also faced substantial stress.

The professional, scientific, and technical services category saw 2,545 insolvencies, while administrative and support services recorded 2,842. The report notes that reduced client spending, project deferrals, and rising overheads continue to weigh on these knowledge intensive service industries.

Some smaller sectors saw notable increases. Water supply, waste management, and remediation activities experienced a 14 per cent year on year rise to 172 insolvencies, reflecting regulatory pressures and cost escalation. Health and social work, along with entertainment and recreation, also posted increases – indicators of ongoing challenges in demand sensitive and labour intensive fields.

Startups slow as uncertainty dampens entrepreneurial appetite

Startup activity mirrored the broader climate of caution. Across the UK, new business registrations totalled 775,242, a 2 per cent decline from 2024. While the drop is modest, it suggests an entrepreneurial environment tempered by risk awareness, higher financing costs and uncertain growth prospects.

Regions with historically vibrant start up ecosystems were not immune. Greater London, which is still the country’s largest hub, saw registrations fall by 3 per cent to 259,092. East Anglia and the South East recorded similar declines.

Some areas bucked the trend: the North West, Scotland, and Wales reported modest increases in startups, though not enough to offset wider national decline.

Regional Trends: London still tops insolvency charts despite a reduction in cases

Regional insolvency patterns reveal a varied picture. Greater London had the highest number of insolvencies with 5,684 cases, despite posting a 11 per cent decline in insolvency related activity.

The North West (4,880 cases), East Anglia (3,812), and West Midlands (3,152) also recorded high volumes, reflecting their exposure to sectors such as manufacturing, construction, and retail, where pressures remain significant.

Only a handful of regions saw increases in insolvency activity year on year. But within those, Northern Ireland experienced a 20.2 per cent rise, while the West Midlands and Wales also posted increases. For most other regions, small declines suggested stabilisation, though (due to the level of cases) not necessarily recovery.

Economic outlook: hope tempered by caution

R3 President Tom Russell emphasised that 2025 represented another year of “stable stress” for UK businesses – a period where insolvency volumes plateaued at high levels and many companies struggled to regain footing after years of economic turbulence.

Looking ahead, Russell offered a measured outlook for 2026. Falling inflation and interest rate cuts may provide relief, but lingering fragility means many firms remain a shock away from distress. Tight margins increase the importance of accessing professional restructuring or turnaround advice early – something R3 continues to advocate.

A landscape still in flux

The R3 Business Health Report reflects the general mood. There is much uncertainty and unpredictability in the world at present. Insolvency activity may be easing, but the underlying pressures reported to us – cost inflation, weakened demand, labour constraints, and financing challenges (cashflow/profit margins) – continue to define the operating environment across the UK. We are not yet in “good news” territory.

The businesses that will survive and in the evolving economic conditions of 2026 and beyond will be the ones that embrace the strong fundamentals of taking early advice, formulating a clear strategy and being adaptable.