Causes of Increased Bankruptcy Cases in the UK. Business and Personal

uk bankruptcy

Business bankruptcy in the UK

Bankruptcy happens to thousands of businesses and people in the UK every year. According to the latest statistics from the office for National Statistics and The Insolvency Service, over 10,000 UK businesses went bankrupt last year. That’s 14,629 to be exact. This is a shocking statistic considering there hasn’t been a riskier time for businesses in the UK. 

Statistics indicate that it has become easier for UK businesses to become bankrupt and get hit with County Court Judgments’ (CCJs). 2016 doesn’t look any better considering 3,694 and 3,617 businesses went bankrupt in Q1 and Q2 respectively. The increasing bankruptcy rate for businesses in the UK can be attributed to many factors like the increase in compulsory liquidations which hit the highest level in the 1st quarter of 2015. 

Individual bankruptcy in the UK

UK businesses are not the only ones of the receiving end. The total number of individual insolvencies in the UK has also increased. The increase can be attributed to factors such an increase in the number of debt relief orders due to factors like changes in the eligibility criteria. The highest individual insolvencies in the UK are experienced in North East, East Midlands and South West UK. The lowest rates are experienced in the east, south-east and London. 

In regards to gender, UK men have a higher probability of being bankrupt than women. This is despite the fact that there are more women than men in the UK. According to 2010 census statistics, women account for 51.2% of UK’s population. Men, however, account for more than 50% of individual insolvencies. 

Causes of individual insolvencies in the UK

The main causes of individual insolvencies are; loss of income or unemployment as well as excessive use of credit. Relationship breakdowns and ill health are also contributing factors to high individual bankruptcy rates in the UK.

Causes of business bankruptcy in the UK

1. Financing problems

This is by far the most common cause of business bankruptcy in the world, let alone in the UK. Like many small businesses globally, small businesses in the UK have problems getting affordable capital. Most of the capital available today for UK businesses is very expensive for businesses which aren’t already thriving. Considering most startups struggle to get afloat so they are forced to take up expensive short term loans because they have no choice, it’s easy to see why so many UK businesses are going bankrupt. There are very few UK startups that are able to survive after taking up expensive business loans. Although the UK has government grants for small businesses, accessing them is very difficult. Startup owners are therefore forced to take up expensive loans to survive the initial challenges facing all startups.

2. Economic instabilities (BREXIT)

Another main cause of increasing business bankruptcy cases in the UK is economic instability. It’s worth noting that businesses succeed when the economy is stable. If the UK economy is booming, UK businesses will follow suit since people are more certain about the future and they have more money to spend. Unfortunately, the UK economy has been unstable since BREXIT came along in 2015. The European Union Referendum Act caused jitters up to the final vote and is still causing jitters going forward since the UK voted to exit the European Union. The UK people aren’t quite sure what the exit means to their financial future. As a result, they have continued to decrease spending which is hurting businesses even further. 

3. Bad economic cycles for some businesses

UK’s retail and wholesale businesses were the worst hit by bankruptcies in 2015 given the fact that 2,259 businesses went bankrupt in this sector. Online retail businesses have overtaken traditional retail and wholesale businesses in the UK forcing them to go bankrupt and close down. Regardless of the performance of UK’s economy going forward, traditional retail businesses will continue to have a hard time staying afloat.

Other reasons for increasing business bankruptcy in the UK

Poor decision making and poor tax management are other reasons why many UK businesses are filing for bankruptcy today. Most startup owners can only blame themselves for making poor business decisions like expanding too fast, renting expensive premises etc. Poor tax management is also to blame in instances where business owners let taxes accumulate to unmanageable levels and then end up being unable to pay. The UK has many of these cases.


From the above information, it’s easy to see why there are increasing cases of business and individual bankruptcy in the UK. From an individual standpoint, many people in the UK are taking up to much credit that is eventually becoming unmanageable. Loss of income and ill health are also to blame. From a business standpoint, capital problems, BREXIT and bad economic cycles for some businesses have contributed the most to high business bankruptcy cases. Businesses need to consider more affordable financing to avoid bankruptcy. It’s also important for UK businesses (especially small businesses) to expand/operate with prudence and move with the times. 

Mark Scott

Is the Company Director of Swift Money Limited. He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.