In Summary
Spillovers from the Middle East crisis will make 2026 the fifth consecutive year of rising global business insolvencies. The ripple effects of lower growth and higher inflation from the Middle East will account for one-third of this increase. The immediate implications for energy markets, shipping costs and supply chains, as well as second-round effects via inflation, financial conditions and the hit to confidence, have pushed up our forecasts to +6% in 2026 for our Global Insolvency Index (+2pps compared to what was expected before the conflict), with the expected plateau delayed to 2027. This comes after a +6% increase in 2025 (+10% in Germany , +4% in France,+7% in the US, +7% in China, +3% in Japan) and hinges on a progressive normalization of traffic through the Strait of Hormuz by June. At a global level, the direct toll from the Middle East represents +7,000 additional cases for 2026 and +7,900 for 2027, including +700 and +200 cases respectively for the US, and +3,750 and +3,600 respectively for Western Europe, while they were already expected to rise by +1,400 cases in 2026 and to fall by -11,000 in 2027. Asia will remain the largest contributor, with China’s insolvencies projected to rise by +9% in 2026 and +5% in 2027 due to ongoing structural challenges. North America will see contrasting trends, with the US extending its rebound (+9% in 2026) while Canada continues its decline (-4%). Western Europe is expected to see a prolonged rise in 2026 (+3%, +4pps compared to pre-war expectations) followed by a moderate decline (-3%) in 2027, with most countries (10 out of 17) within the -4%/+4% range and thus indicating a quasi-stable number of insolvencies. This is the case for Germany (+2% to 24,650), France (+2% to 69,900), Belgium (+1% to 11,750) and the UK (-1% to 26,550). This prolonged risk of non-payment (insolvencies of buyers) and supply-chain disruptions (insolvencies of suppliers) requires close monitoring of critical buyers and suppliers.
The extended rise in business insolvencies will put 2.2mn jobs directly at risk globally in 2026 (+94k compared to 2025), followed by a marginal decrease in 2027 (-34K). Globally, the main sectors at risk are construction, retail and services. In 2026, Europe (1.3mn) would lead this global count, notably Western Europe (~960k), ahead of North America (~460k), both recording a 12-year high, and followed by Central and Eastern Europe (~325k) and Asia (~346k) This is equivalent to 6% of the number of unemployed people in the US and Europe, but with significant differences across countries (1% in Spain, 4% in Italy, 7% in Germany, 9% in the UK and 11% in France).
Things could get worse before they get better: Several geopolitical and economic shock shocks could significantly amplify insolvency risks. First, the longer the conflict lasts, the stronger the impact on the insolvency outlook given the region’s central role in supplying essential inputs such as LNG, fertilizers, aluminum, helium and sulfur. This disruption is driving up costs across global value chains, from agrifood to manufacturing, healthcare and technology, exacerbating pressures on energy-intensive sectors such as transportation (shipping, aviation, road transport), chemicals and metals. The combination of weaker demand, rising input costs and tighter financial conditions is straining companies with weak pricing power, thin margins, high debt levels or structurally higher working capital requirements (e.g. machinery, transport equipment, electronics, pharmaceuticals and construction). Countries and sectors are unevenly exposed to the direct and indirect impacts of the conflict in the Middle East. Asia is most vulnerable to the oil price and supply shock, but most developed markets’ economies are highly dependent on oil and gas imports. Beyond transportation, energy-intensive sectors such as basic metals and chemicals are immediately more vulnerable in particular in Europe where the risk of non-payment already increased noticeably prior to the war in Iran. Second-round effects are likely to materialize in particular in consumer sectors in Europe, and cyclical sectors in both the US and APAC. Zooming in Europe, real estate and technology could suffer the most from a margin squeeze based on 2022-2023 episode. A prolonged conflict could push up global insolvencies by closer to +10% in 2026 and +3% in 2027, i.e. roughly +3pps compared to the current baseline scenario. Overall, this would mean +4,100 additional cases in the US and +10,500 in Western Europe over 2026-2027. The AI boom is another risk to monitor. A collapse in the current AI-driven economic boom could mirror the dot-com bubble burst, leading to an additional +15,600 insolvencies in the US and Western Europe over 2026-2027, boosting the baseline count by +6,100 and +9,500 cases, respectively. Fiscal concerns, such as confidence shocks related to high debt levels, could further exacerbate insolvency risks, particularly in the Eurozone, boosting business insolvencies by +22,500 firms in Western Europe over 2026 and 2017.