More than three companies in the UK are failing each day, a rate that contradicts recent claims by Chancellor Rachel Reeves of a robust economy. Analysis of official figures by bankruptcy specialist Kroll indicated that 649 firms entered administration in the first half of 2026, a 6% increase compared to the same period in the previous year. This trend has raised concerns about the pressure on British businesses, particularly following approximately £75 billion in tax increases implemented since Reeves assumed the role of Chancellor two years ago.
A report from the Resolution Foundation, a think tank with ties to the Labour party, also offered a critical assessment of the government's economic management. Ruth Curtice, chief executive of the foundation, noted that Reeves has enacted more tax rises than any other Chancellor on record despite her relatively short tenure. Curtice warned that the labor market has weakened under the current administration, with unemployment approaching 5% and the number of individuals aged 16 to 24 not in education, employment, or training (NEETs) surpassing one million.
The report highlighted that the decision to increase employer National Insurance Contributions in the Autumn Budget 2024 has not been beneficial. Curtice added that private sector pay has been declining since October of the previous year, and households continue to face financial strain due to the rising cost of essential goods. The government's efforts to improve public finances and stimulate growth were constrained by manifesto commitments, leading to tax increases that may have negatively impacted businesses.
Employers have reportedly struggled with increased national insurance costs, issues with business rates reforms, the introduction of inheritance tax on family businesses, and other rising expenses. These include significant increases in the minimum wage, green energy levies, and new worker rights. Official figures released last month showed a 0.8% decrease in disposable household incomes in the first quarter of the year, after accounting for inflation. The metric for real household disposable income per head, a target set by Keir Starmer, has now fallen in four of the last five quarters and is lower than when the current government took office.
Despite these indicators, Reeves, speaking at her Mansion House dinner, asserted that the economy is strong due to her policy decisions. She stated that the government has made strides in restoring economic stability and has earned credibility. Reeves claimed that investment, productivity, and wages are all on the rise. However, these assertions contrast with the experiences of many households and businesses. Official data indicates that inflation has risen from 2% to 2.8% since Reeves became Chancellor. Unemployment has increased from 4.1% to 4.9%, and the number of people employed has fallen by 155,000.
Rising youth unemployment has fueled concerns about a potential 'lost generation' who may rely on benefits throughout their working lives, a situation exacerbated by increased staffing costs resulting from government policies. Further complicating the economic outlook, an increase in oil prices due to intensified hostilities in the Middle East could worsen existing challenges in the coming months.
Some figures in the business community have expressed skepticism about Reeves's economic assessment. Sir Martin Sorrell, a prominent advertising executive, found it unusual for Reeves to deliver the Mansion House speech, given her impending departure from the Chancellorship. Steve Perez, founder and CEO of Global Brands, stated that Reeves has little to celebrate, citing the unsustainable tax burden in the UK resulting from her decisions on national insurance, business rates, and inheritance tax, which he believes have negatively impacted businesses and jobs. Perez expressed hope that a new Chancellor will better support business growth.