The number of company insolvencies in England and Wales declined in September from August, the latest sign that the UK economy is holding up in the face of surging energy prices and higher borrowing costs.

Insolvencies dropped to 1,882 last month, according to official data released Tuesday, down 4% from August and 5% below the same period in 2025. The number of firms forced to liquidate ticked higher, while cases of voluntary liquidations, which make up the bulk of insolvencies, matched the prior month. Administrations, where insovlency practitioners take control of distressed companies, fell sharply.

The overall decline in insolvencies suggests that at least some of the pessimism surrounding the UK economy is misplaced, according to Kathleen Garrett, a partner at law firm Reed Smith who works on restructuring and insolvency.

The data is particularly encouraging when measured against the increase in the number of companies registered since the pandemic, Garrett said. Firms may have received short-term boosts from retail spending over the summer, which had unusually warm weather, and spending around the World Cup football tournament. The UK may also be seeing a revival in productivity spurred by artificial intelligence.

“Widespread use of AI may also have contributed to an increase in productivity, particularly for smaller and more nimble companies that may be particularly well-placed to harness this technology,” said Garrett.

There are other signs of resilience in recent economic data. UK gross domestic product unexpectedly rose in August, while unemployment fell and employers added jobs last month. Garrett said that any enthusiasm needs to be tempered, however, citing a rise in energy prices, inflation and credit card defaults.