According to the latest data from the Insolvency Service, accommodation and food service insolvencies dropped 19% from 327 in July to 265 in August 2025, marking the first month of decline since spring. Numbers were also slightly down year-on-year from 271 in August 2024, signalling a short-term stabilisation in the sector.
RSM UK partner and head of leisure and hospitality Saxon Moseley said the fall in insolvencies was “a welcome respite” after three consecutive months of increases, but cautioned that cost challenges remain deeply embedded.
‘Insolvencies will continue’
“This was likely helped by good weather over the summer, encouraging consumers to go out and socialise, which led to GDP growth of 1.2% in the sector in August,” he said. “But with food inflation really biting and challenges passing on further cost increases, it’s unlikely this decline in insolvencies will continue.”
Moseley pointed to the sharp rise in wage costs and higher National Insurance contributions as key ongoing headwinds. “This combination results in a double whammy for operators, who are paying higher hourly wages and more tax on those payments,” he added.
Pubs were the main beneficiaries of the hot weather, with many operators reporting stronger drink-led sales through July and August. Restaurants and bars, however, continued to feel pressure from lower discretionary spend and weaker midweek trading.
Autumn Budget
Many in the sector are now looking to the Christmas party season to sustain cashflow into the new year, with renewed calls for Government intervention in the upcoming Autumn Budget. Industry leaders continue to push for business rates reform, employment cost support, and measures that stimulate consumer confidence.
“The Budget is an opportunity to kickstart the UK economy,” Moseley said. “To do that, we need investment in the right areas and measures that foster confidence without driving inflation.”
