Britain’s financial pressure is intensifying as new figures show the number of people falling into insolvency has risen sharply, with thousands of households struggling under the weight of higher costs and weaker economic conditions.
Personal insolvencies across England and Wales climbed 10 per cent in May compared with the same month last year, according to the Insolvency Service, with 11,223 people entering formal debt solutions.
The increase came despite a modest month-on-month rise, with insolvencies up 2 per cent compared with April.
The figures highlight the continued strain facing households after years of elevated living costs, expensive borrowing and pressure on disposable incomes.
Of those entering insolvency procedures in May, 656 were bankruptcies, 4,191 were debt relief orders and 6,376 entered individual voluntary arrangements.
Debt relief orders have become increasingly common in recent years after eligibility rules were expanded, allowing more financially distressed households to access support.
While bankruptcy levels remain below pre-pandemic averages, the broader picture points to growing financial vulnerability among consumers who are struggling to absorb higher costs.
The figures come as businesses continue to face their own economic challenges.
There were 1,868 registered company insolvencies in England and Wales during May. While this represented a fall from the previous month and a decline compared with a year earlier, restructuring advisers warned that many firms remain under severe pressure.
Robert Young, restructuring and insolvency partner at Azets, said the underlying situation remained difficult for both households and businesses.
“Numbers are still high and businesses are still struggling — with many facing an uncertain future,” he said.
He pointed to a combination of geopolitical instability, rising costs, political uncertainty, limited access to affordable finance and unpaid debts as key drivers of financial distress.
“Unless the climate becomes easier and some way is found of lightening the cost load on businesses, it’s likely demand for advice and support will remain high,” he added.
The warning comes as companies continue to deal with stubborn operating costs, including energy, wages, food and fuel prices.
Giuseppe Parla, restructuring and insolvency director at Menzies LLP, said many businesses were being forced to rely on short-term solutions while facing mounting pressures.
“Households have less to spend, energy, labour, oil and food prices remain elevated,” he said.
“The question for many operators is whether short-term measures will be enough to offset what is stacking up against them.”
The latest data underlines the fragile state of Britain’s economic recovery.
Although inflation has eased from its peak, many households are still dealing with the delayed impact of higher mortgage payments, rents, bills and everyday expenses.
For struggling families and businesses, the squeeze is far from over — with insolvency figures offering a stark reminder that the cost-of-living crisis continues to leave deep scars.
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