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27 October 2026

After five consecutive years of rising insolvencies, the UK is expected to enter a period of gradual stabilisation. We forecast the number of business insolvencies to decline by -4% in 2026 and a further -3% in 2027, reversing the upward trend seen since 2021.

Despite the improving outlook, insolvency levels remain elevated by historical standards. By 2027, UK business insolvencies are still expected to sit 21% above pre-pandemic averages, reflecting the lasting impact of tighter financing conditions, weak economic growth and pressure on business margins.

Summary

Key Takeaways

  • UK business insolvencies are forecast to fall by -4% in 2026 and -3% in 2027, marking the end of a five-year upward cycle.
  • The operating environment remains challenging, with higher financing costs, weak economic momentum and margin pressure continuing to test corporate resilience.
  • Construction, real estate, trade and hospitality remain among the sectors most exposed to insolvency risk, while insolvency levels across Western Europe remain significantly above pre-pandemic norms.

     

"For many UK businesses, the past few years have been marked by uncertainty and rising insolvency levels, so it's encouraging to see insolvencies beginning to stabilise. However, our experience shows that risks rarely disappear evenly across the market. Some sectors, including construction, real estate and hospitality, will continue to face pressure even as the broader picture improves."

Stephen Bramall
UK Credit Director, Allianz Trade

UK insolvencies begin to stabilise

The UK is expected to see business insolvencies decline over the next two years, in contrast to a broader Western European picture of persistently elevated insolvency levels. Following years of increases, insolvencies are forecast to fall to around 25,600 cases in 2026, before easing further to approximately 24,800 in 2027.

However, the improvement needs to be viewed in context. Many businesses continue to face tighter financial conditions, subdued demand and ongoing pressure on profitability. As a result, insolvency levels are likely to remain well above those seen before the succession of economic shocks that followed Brexit, the pandemic and the inflation crisis, increasing customer insolvency risk for businesses trading on credit terms.

Which sectors remain most exposed to insolvency risk?

While UK insolvencies are expected to decline, this does not signal a return to normal trading conditions. Businesses continue to operate against a backdrop of tighter financial conditions, weak economic growth and ongoing pressure on operating margins. As a result, insolvency risk remains concentrated in a handful of sectors.

Construction continues to be one of the UK's largest contributors to business insolvencies, reflecting ongoing financing pressures and wider sector challenges. Real estate remains exposed to elevated borrowing costs and weaker investment activity, while businesses in trade and retail continue to balance persistent cost pressures against cautious consumer and business spending. Meanwhile, the hospitality and accommodation sector faces continued margin pressure as higher operating costs weigh on profitability despite improving trading conditions in parts of the market.

Global and European insolvencies remain elevated

The UK's improving outlook contrasts with a more challenging international environment, where insolvency pressures are expected to remain high. Globally, business insolvencies are forecast to increase by +5% in 2026 and a further +1% in 2027, marking five consecutive years of rising insolvency levels.

Western Europe is likely to be a key contributor to this increase. Regional insolvencies are forecast to increase by +4% in 2026 (before easing marginally by around -1% in 2027 and -2% in 2028), bringing the insolvency index back to levels comparable with its Global Financial Crisis peak and 33% above pre-pandemic averages. Although modest declines are expected from 2027 onwards, most countries are likely to remain on a prolonged high plateau rather than experience a significant improvement in insolvency levels. Check out our global insolvency report for more insights.

What does this mean for UK businesses?

As insolvency levels remain above historical norms, understanding customer risk is becoming increasingly important. As Stephen Bramall, UK Credit Director at Allianz Trade, explains: "Understanding who you're trading with, monitoring customer financial health and acting early when risks emerge can make a significant difference to business resilience."

Having access to timely customer risk insights can help businesses make more informed trading decisions and strengthen resilience in changing economic environments. At Allianz Trade, we combine trade credit insurance, business intelligence and debt collection expertise to help you assess customers, protect cash flow and trade with confidence.

Find out how Allianz Trade can help protect your business from customer insolvency risk. Get in touch.

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Our expertise and commitment

Allianz Trade is the global leader in trade credit insurance and credit management, offering tailored solutions to mitigate the risks associated with bad debt, thereby ensuring the financial stability of businesses. Our products and services help companies with risk management, cash flow management, accounts receivables protection, Surety bonds, Business Fraud Insurance,  debt collection processes and  e-commerce credit insurance ensuring the financial resilience for our client’s businesses. Our expertise in risk mitigation and finance positions us as trusted advisors, enabling businesses aspiring for global success to expand into international markets with confidence.

Our business is built on supporting relationships between people and organisations, relationships that extend across frontiers of all kinds - geographical, financial, industrial, and more. We’re constantly aware that our work has an impact on the communities we serve and that we have a duty to help and support others. At Allianz Trade, we’re strongly committed to fairness for all without discrimination, among our own people and in our many relationships with those outside our business.