Storm Clouds Behind the Sunshine: Hospitality Insolvencies Dip, but for How Long?

The UK hospitality sector enjoyed a brief respite over the summer, as insolvencies fell by 19% following a surge in consumer spending driven by warm weather and seasonal footfall. Yet, behind the sunny statistics lies an industry still fighting deep structural pressures — and anxiously awaiting government action to ease its growing burden.

According to government data, 265 accommodation and food service companies entered insolvency in August 2025, down from July’s alarming 327 cases, which marked the highest monthly figure since late 2024 .

Saxon Moseley, partner and head of leisure and hospitality at audit and consulting firm RSM UK, warned that the improvement may only prove temporary. “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,” Moseley explained. “But with food inflation really biting and challenges passing on further cost increases, it’s unlikely this decline in insolvencies will continue.”

The challenges are compounded by what Moseley called a “double whammy” of cost pressures. Operators are facing not only record-high wages in the food and accommodation sector — as they fight to retain staff — but also increased National Insurance contributions. Together, these factors have created a precarious environment for even well-run businesses, squeezing margins and testing resilience.

As the industry looks toward the Christmas trading period — often described as hospitality’s “golden quarter” — there is cautious optimism that festive spending might provide some relief. But this hope is tempered by the uncertainty surrounding Chancellor Rachel Reeves’s upcoming Autumn Statement on 26 November, which will set the tone for government support or further strain.

Trade body UKHospitality has warned the sector stands to lose over 111,000 jobs by the end of November, attributing much of that fallout to the ripple effects of tax rises introduced in the previous year’s Autumn Statement .

“The hospitality sector will be nervously waiting to see what measures are announced in the budget,” Moseley added. “There’s an opportunity for government to use the budget as a tool to kickstart the UK economy — but to do that, we need to see investment in the right areas and measures that foster confidence without driving inflation.”

While the summer sun provided a fleeting reprieve, the industry’s long-term outlook depends on policy decisions — and whether the government chooses to treat hospitality as an economic cornerstone or a casualty of fiscal tightening. For now, the sector remains balanced precariously between recovery and relapse.