Navigating Financial Pressures: Aryza’s Insights on Q1 2025 Insolvency and Lending Trends
Aryza, is pleased to share its analysis of recent trends in the individual and company insolvency market in England, Wales, and Northern Ireland from January to March 2025, based on the latest data released by the Insolvency Service.
Personal Insolvency
The total number of individual insolvencies in the first quarter of 2025 reached 29,058, up from 26,933 during the same period in 2024. This 8% rise reflects the growing financial pressure caused by inflation, higher interest rates, increased living costs, and recent changes to insolvency processes.
The total number of individual insolvencies in January was 9,706, 12% higher than the same time last year. This consisted of 592 bankruptcies, 5,267 individual voluntary arrangements (IVAs), and 3,847 debt relief orders (DROs), with DRO numbers been at record high monthly levels since the abolition of the upfront £90 fee in April 2024.
In February, 10,147 people entered insolvency, 5% lower than the levels at the same time last year. These were made up of 600 bankruptcies, 5,682 IVAs, and 3,865 DROs.
For March, 9,205 individuals entered insolvency, only 2% higher than the previous year, with 613 bankruptcies, 3,490 DROs and 5,102 IVAs recorded.
Richard Haymes, Associate Director of Policy and External Relations at Aryza, commented:
“As economic conditions continue to shift, individuals living with problem debt continue to struggle to manage their credit commitments. Aryza’s independent market research shows that of individuals living with problem debt, only 20% of those surveyed were able to pay their monthly bills in full, with Council Tax, energy, and water bills being the most challenging.
“Statutory debt solutions like bankruptcies, IVAs, and DROs remain vital tools offering legal protection and halting debt collection to help people regain control of their finances.
“Following the removal of the DRO fee in 2024 and the FCA’s ban on the debt packager model in late 2023, personal insolvency volumes appear to have stabilised within a new range. If current conditions hold, we expect this trend to continue through 2025.”
Corporate Insolvency
In the first quarter of 2025, corporate insolvencies totalled 5,998, compared to 5,697 in 2024. This increase indicates that businesses continue to face significant financial challenges, even as the broader economy grew at higher-than-expected rates. Rising operational costs, higher interest rates, and persistent inflation have contributed to cash flow problems, making it more difficult for some companies to remain solvent. The construction sector has been particularly affected with residential construction experiencing six straight months of decline between September 2024 and February 2025 due to decreased demand, high borrowing costs, and a shortage of projects. These statistics highlight that many firms are at risk, which may be exacerbated by global economic uncertainty, emphasising the necessity for ongoing support and prudent financial management to safeguard recovery initiatives.
In January, there were 1,971 corporate insolvencies, which is 11% higher than the numbers in the same period in 2024. This was made up of 1,546 creditors’ voluntary liquidations (CVLs), 142 administrations, 14 company voluntary arrangements (CVAs), and 269 compulsory liquidations.
February saw 2,035 insolvencies which is 7% lower than the numbers in February last year. This consisted of 1,520 CVLs, 115 administrations, 7 CVAs and 393 compulsory liquidations. The number of compulsory liquidations in February 2025 was the highest monthly number since September 2014.
When looking at the statistics from March, 1,992 companies entered insolvency, 9% higher than the previous time last year. This comprised 295 compulsory liquidations, 1,543 CVLs, 137 administrations and 17 CVAs.
Richard Haymes, Associate Director of Policy and External Relations at Aryza, commented:
“Between January and March 2025, over 211,112 new UK companies were registered. During the same period, there were 190,147 dissolutions, an increase of 19% compared to the same period in 2024. These numbers illustrate the entrepreneurial drive of the nation, and the ongoing challenges businesses face in navigating the complexities of changing markets, consumer sentiment, innovation, regulatory changes, and government policy.
“Corporate insolvencies were slightly higher in Q1 2025, partly driven by specific sectors including hospitality and construction. With a complex global economic backdrop and policy changes in the UK, including national insurance and minimum wage increases effective from April, it is likely that corporate insolvencies will rise through Q2 and Q3.”
Lending Market Insights
From January to March 2025, lending activity showed notable variation, highlighting the dynamic balance between borrower caution and emerging economic confidence. Net lending to households and private sector companies rose to £7.2 billion in January, dipped to £5.1 billion in February, and then surged to £17.3 billion in March. These shifts illustrate the influence of changing interest rate expectations, seasonal financial behaviours, and renewed momentum in housing and credit markets.
January saw the highest net mortgage lending since September 2022 at £4.2 billion, and consumer credit net borrowing increased to £1.7 billion, suggesting a renewed consumer confidence and greater willingness to take on debt amid improving economic sentiment or stabilising interest rate expectations.
February saw robust activity with net mortgage lending of £3.3 billion and consumer credit borrowing of £1.4 billion, indicating sustained borrowing demand despite heightened living costs.
March marked a significant increase in net mortgage lending to £13 billion, the highest level since June 2021, but consumer credit net borrowing fell to £0.9 billion
These trends point to a lending environment undergoing recalibration, as both borrowers and lenders respond to shifting economic signals. While demand has shown resilience, lenders continue to prioritise affordability and prudent risk management, ensuring that credit provision remains sustainable amid ongoing market changes. At the same time, challenges remain: Aryza’s market research shows over a third of consumers (37%) report struggling to meet monthly bills most of the time, with 34% missing loan repayments and nearly a third falling behind on council tax (32%) and credit card payments (31%) in the last 12 months. Encouragingly, 85% of those facing difficulties have reached out to creditors, underscoring the importance of responsive, empathetic engagement and early intervention strategies.
Aryza is committed to providing ongoing quarterly analysis and commentary on the personal and corporate insolvency market, helping stakeholders navigate this evolving landscape effectively, and ensuring they are well informed about the latest trends and developments.