UK Recruitment Agency Insolvency Statistics

There were 136 insolvencies from January to June 2026 against 181 in the same months of 2025, down 24.9%, while the rolling 12-month total fell from 332 to 300, down 9.6%.

Insolvencies across employment activities as a whole fell 11.7% over the same period. These are Company Debt calculations from Insolvency Service Table A1b data.

The gap between those two numbers is the story. A 24.9% fall and an 11.7% fall cannot both be the underlying rate of improvement: the year-to-date figure is measured against a genuinely severe first half of 2025.

2026 has run 17, 24, 24, 19, 22, 30, an average of 22.7 a month against roughly 30 a month across the same period of 2025. That is a real improvement.

The rolling 12-month measure, harder to flatter with a well-chosen starting point, is the number to trust.

This is the mirror image of what is happening one SIC code over. Permanent-placement agencies fell 24.9% year to date. Temporary employment agencies (SIC 782) rose 7.3%.

Same trade, often the same building, moving in opposite directions.

Permanent placement made up 51.5% of employment-activities insolvencies in the first half of 2026, down from 60.5% a year earlier. Its share of the wider administrative and support services section fell too, from 14.0% to 13.1%.

The reason sits in the trade data, not the insolvency data: employers have been buying temporary staff instead of permanent ones. Good for the temp desk, bad for the permanent desk.

The other half of this story is on our temporary staffing agency insolvency statistics page.

For most of the last decade this was a stable trade. Insolvencies sat between 127 and 154 from 2016 to 2019, and barely moved through the pandemic: 135 in 2020 and 142 in 2021, held in check by government support and the restrictions on creditors.

Then it tripled. 206 in 2022, 246 in 2023, 295 in 2024 and 345 in 2025, each year worse than the last, ending 131% above the 149 recorded in 2019. This was not a single bad year. It was four consecutive years of deterioration, which is a different and more serious pattern.

2026 is the first year that has broken the run. The rolling 12-month total of 300 is better than the 332 before it, and better than the 2025 calendar year.

It is still twice what this sector was losing in 2019.

In the recruitment cases we handle, the agency is almost never short of activity. It is short of completions. The consultants are busy and the pipeline looks fine, but interviews don’t pay the bills.

By the time a director calls us, the pattern is usually a year old. Billings dropped first, then the good consultants left, because they can smell a thin desk before anyone announces anything.

The ones who stayed had bigger targets and worse patches. The office lease and the salary bill were both signed when things were better, and neither cares.

There is nearly always a personal guarantee in it too, on the office lease or the invoice finance, and it is the last thing anyone raises and the first thing they have been losing sleep over.

A guarantee does not improve by being ignored, and there is more that can be done about it early than late.

We would not start with the pipeline. We would look at billings actually collected in the last three months against the salary bill, how much revenue is still inside a rebate period, what is owed to HMRC, and what happens if the two best billers leave.

Creditors’ voluntary liquidations are the standard route out, at 266 of the 345 insolvencies recorded in 2025, up from 238 in 2024. That is what it looks like when directors of asset-light businesses accept the market has gone and close the company themselves.

The sharper movement was in compulsory liquidations, which more than doubled from 23 to 48, taking them from 7.8% of the total to 13.9%: a creditor petitioning to wind the company up rather than waiting.

PAYE and VAT arrears are the usual reason a recruitment agency ends up in that column.

Administrations barely moved, from 28 to 29, and remain a small share. Administration needs a business somebody would buy, and a permanent agency whose value walked out of the door with its consultants is a hard thing to sell.

SIC group 781, activities of employment placement agencies, covers companies whose recorded primary business is placing candidates with employers, mainly into permanent roles. It includes executive search and selection. Agencies supplying workers on a temporary basis sit under SIC 782, and longer-term human resources provision under SIC 783.

A single company can run both a permanent desk and a temporary desk. The SIC code records its main recorded activity, not a clean split of what it actually does, so the boundary between 781 and 782 is neater in the data than it is in the trade.

These are company counts, not the number of offices, consultants or candidates affected. One insolvent company may run several trading brands, and an agency can stop trading without ever entering a formal insolvency procedure.

The figures are insolvency volumes, not a failure rate. They are not adjusted for the number of active recruitment agencies. That matters here more than on most pages: thousands of agencies were incorporated during the 2021 and 2022 hiring boom, so a rising count could reflect a larger population as much as a riskier one.

The SIC 781 figures come from Table A1b and are not seasonally adjusted. The Insolvency Service seasonally adjusts parts of its headline England and Wales series where it finds seasonality, but that adjustment does not apply to the industry figures used here. The latest month is provisional and can be revised.

None of the figures above decide whether your agency is viable. Sector totals never do. The questions that matter are narrower: does the cash actually collected each month cover the salary bill, how much of your recent revenue could still be clawed back under a rebate clause, and what is owed to HMRC on PAYE and VAT right now?

Plenty of agencies in difficulty are sound businesses carrying a cost base built for a bigger market, and that is worth knowing, because a cost base can be cut.

It is more serious when the arrears have been growing for several quarters, when a rebate wave is coming and the commission on it has already been paid, or when the office lease is the biggest single thing keeping the company alive on paper and dead in practice.

If you are reading this having just worked out that this quarter will not cover payroll, the useful thing to know is that the earlier you speak to someone, the more room there is to move: the lease renegotiated, an HMRC Time to Pay arrangement, or a rescue procedure such as a Company Voluntary Arrangement or administration.

Once HMRC petitions, and on these figures HMRC has been petitioning a lot more, the bank account is usually frozen within days and the choice narrows to creditors’ voluntary liquidation or a winding-up petition you did not choose. Our insolvency advice for directors is the place to start if you want to talk it through first.