2025: The Year Australian Business Stopped Pretending

2025 was the year the deferrals ran out. The year pandemic-era survival mechanisms finally expired. The year businesses discovered whether the problems they’d been managing were temporary or structural.

For some, the answer was encouraging. The economy turned a corner, rate cuts arrived, and consumer spending showed signs of recovery. For others, the year brought reckoning — record insolvencies, high-profile collapses, and the realisation that the problems weren’t going away.

Here’s what actually happened — and what it means heading into 2026.

The rate cuts finally arrived

After 18 months of holding at 4.35%, the RBA began cutting rates in February 2025. Three cuts followed — February, May, and August — taking the cash rate from 4.35% down to 3.60%.

For mortgage holders, the relief was real. A homeowner with a $600,000 variable loan saw their annual repayments drop by roughly $3,800. Business owners carrying debt saw their interest expenses fall meaningfully for the first time since 2022.

But the rate cycle didn’t play out as expected. By late 2025, inflation had ticked back up — 3.8% in October, well above the RBA’s 2-3% target band. The December meeting held rates steady, and the RBA’s minutes revealed board members discussing the possibility of rate rises in 2026.

The takeaway: businesses that used the rate cuts to restructure debt and strengthen their cash position gained ground. Those who treated lower rates as a return to normal conditions may find themselves exposed if rates move back up.

Record insolvencies — but not where you’d expect

FY2024-25 set a record for corporate insolvencies in Australia. By mid-year, over 7,400 companies had entered external administration — a 47% increase on the prior year. Full-year figures are on track to exceed 14,000 failures, surpassing the 11,000+ of FY2023-24.

The headlines focused on retail. Mosaic Brands collapsed in late 2024, owing $249 million to 171 creditors. Its brands — Katies, Noni B, Millers, Rivers — closed through early 2025. Ally Fashion followed in March, shuttering 185 stores. Jeanswest returned to administration. Wittner, a 113-year-old shoe retailer, called in administrators in April.

But the broader story was more revealing. Construction and hospitality continued to dominate insolvency numbers — 27% and 15% of total failures respectively. The RBA’s Financial Stability Review noted that many failing businesses were older, established companies — not startups that never found their footing, but businesses that had operated for years before conditions exposed underlying weaknesses.

The common thread wasn’t industry. It was visibility — or the lack of it. Businesses that failed typically showed the same pattern: gradual deterioration, warning signs that went unaddressed, and problems that became crises only because no one could see them clearly enough, early enough.

Political stability — without transformation

The May 3 federal election returned Labor with its largest majority since Federation — 93 of 150 seats. The Coalition collapsed to around 40 seats, its worst result in post-war history.

For business, the outcome delivered stability without revolution. The $20,000 instant asset write-off was extended to June 2026. Energy bill relief continued through December 2025. The government’s industrial relations reforms remained in place, with additional measures flagged around non-compete clauses.

What didn’t arrive: sweeping reform. Neither major party campaigned on substantive small business policy. As the Treasurer put it: “While last term was about inflation and a little bit of productivity, this term will be about productivity and a little bit of inflation.”

The implication for business owners is clear: don’t wait for policy to solve your problems. The environment is stable enough to plan, but the heavy lifting remains yours to do.

Trade disruption — from an unexpected direction

The Trump administration’s “Liberation Day” tariffs in April caught many Australian businesses off guard. A 10% baseline tariff now applies to most Australian exports to the US. Steel and aluminium face 50% tariffs as of June. Automobiles attract 25%.

The direct impact on Australia’s economy is manageable — the US runs a trade surplus with Australia, and our bilateral trade is relatively small. But the indirect effects are significant. Three-quarters of Australian industrial businesses surveyed in August reported either current or expected impacts from US tariffs — through supply chain disruption, input cost increases, or weakened demand from Asia.

The Australian Industry Group’s research found that supply chain disruptions had reversed their post-pandemic improvement trend. In August 2025, 47% of industrial businesses reported active disruptions — up 12 points from ten months earlier.

For SMEs, the lesson is that trade policy uncertainty isn’t just a macroeconomic story. It flows through to input costs, supplier reliability, and customer demand in ways that require monitoring and response.

Energy relief ends — costs don’t

The Energy Bill Relief Fund expires on December 31, 2025. For two years, households received up to $300 annually in rebates; small businesses received up to $325. The federal government has confirmed there will be no fourth round.

MYOB’s December 2025 Business Monitor found that 30% of SMEs now cite energy costs as a source of high or extreme pressure — an 11-point increase in just six months. With rebates ending and wholesale prices still elevated, that pressure will intensify in 2026.

The transition to renewables is underway, but it’s not delivering cost relief yet. For businesses operating on thin margins, energy has moved from a manageable overhead to a strategic concern — one that requires active management rather than passive acceptance.

What 2025 revealed

Strip away the headlines and 2025 taught a consistent lesson: the businesses that navigated challenging conditions weren’t the ones with the best forecasts or the most optimistic assumptions. They were the ones with visibility.

They knew their numbers — not 50 metrics on a dashboard, but the three to five figures that actually predicted performance. They understood their cash position in weeks, not months. They could model scenarios: what happens if rates rise, if a major client leaves, if energy costs jump 20%.

The insolvency data is unambiguous: most failing businesses don’t collapse suddenly. They deteriorate gradually, with warning signs that go unnoticed or unaddressed. The difference between survival and failure is often just the ability to see what’s happening before it becomes irreversible.

2025 was the year the deferrals ran out. 2026 will be the year that tests whether Australian businesses learned anything from it.

2025 at a glance

• February: RBA cuts cash rate 25bp to 4.10% — first cut since 2020

• March: Ally Fashion collapses — 185 stores, 1,000+ staff

• April: Trump “Liberation Day” tariffs — 10% baseline on Australian exports; Wittner enters administration

• May: Federal election — Labor wins 93 seats, largest majority since Federation; RBA cuts to 3.85%

• June: Steel/aluminium tariffs rise to 50%; Mosaic Brands stores complete closure; FY2024-25 insolvencies hit record

• August: RBA cuts to 3.60%; supply chain disruptions rise to 47% of industrial businesses

• October: Inflation rebounds to 3.8% — above RBA target band

• December: RBA holds rates; discusses possible 2026 increases; Energy Bill Relief Fund expires

Sources

RBA Monetary Policy Decisions 2025; ASIC Insolvency Statistics; RBA Financial Stability Review April 2025; Australian Industry Group Trade & Supply Chains Survey August 2025; MYOB Business Monitor December 2025; AEC Federal Election Results 2025; Department of Climate Change, Energy, the Environment and Water; Inside Retail Australia.

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GBN Partners

The numbers that matter are the cheat sheet for the activities that count.