Business failures in the UK are finally turning a corner, but the numbers will remain elevated for years to come, according to Allianz Trade’s October 2026 Insolvency Report.
The trade credit insurer expects UK business insolvencies to drop 4% to approximately 25,600 cases in 2026, followed by a further 3% decline to around 24,800 in 2027. That reversal ends a five-year upward run, but it does not end the problem. Even at those reduced levels, insolvencies would remain 21% above pre-pandemic averages by 2027, and well above the figures seen before the succession of shocks that have buffeted UK businesses since Brexit.
Construction has accounted for around 17% of all UK insolvencies in every rolling period tracked by the Insolvency Service through mid-2026, with wholesale and retail trade consistently at 15% to 16%. Hospitality and real estate follow closely. These are the sectors where delayed or failed payments move fastest through supply chains, and where the exposure for businesses extending credit on standard terms tends to be highest.
Allianz Trade identifies several overlapping structural pressures keeping the floor elevated. The stock of active UK companies grew by roughly 10% between 2021 and 2025, broadening the pool of financially fragile businesses exposed to failure. In Europe as a whole, fewer than half of new companies survive beyond five years.
At the same time, monetary policy has remained tighter for longer than many businesses planned for, with Allianz Trade noting that 60% of countries globally will maintain higher policy rates in 2027 than in the prior 12 to 24 months.
Energy costs, particularly for sectors with significant industrial exposure, add a further squeeze on margins. GDP growth is forecast to underperform the 2023 to 2025 period. Allianz Trade forecasts UK GDP growth of 2.6% in 2026 and 2.8% in 2027, against 3% in 2025, a level the report characterises as underperformance relative to the 2023–2025 period.
“With multiple shocks compounding since the start of the year, much higher-than-expected interest rates are ramping up the pressure on already fragile companies and this will continue,” said Aylin Somersan Coqui, chief executive of Allianz Trade. “Higher-for-longer energy costs will also intensify the pressure on profitability, especially for energy-intensive European industries.”
Allianz Trade estimates that 213,000 UK jobs are directly at risk from business insolvencies between 2026 and 2027. Globally, the figure reaches 2.7 million, a rise of 180,000 compared with 2025, and 700,000 higher than in 2023. Europe accounts for close to 60% of the global jobs-at-risk figure.
The UK trade credit insurance market, meanwhile, is unusually competitive. Capacity is widely available, pricing has softened, and at least one senior market figure has described Britain as the place where trade credit insurance pricing is most intense globally.
That leaves businesses still carrying uninsured credit exposure in an unusual position - competitive pricing and elevated counterparty risk at the same time. With insolvencies declining on paper but remaining structurally elevated, the window between competitive pricing and rising counterparty risk may not stay open indefinitely.
The trade credit insurance market’s response to mounting UK insolvency pressure has so far been orderly, but late payment signals are tightening alongside the insolvency data. Atradius’ 2026 Payment Practices Barometer found that nearly four in five Western European companies faced late payments that year, with restricted bank finance pushing trade credit’s share of all B2B transactions to 52%.
The Allianz Trade report flags an emerging signal that sits outside the headline numbers. Across eight EU economies and nine sectors, the firm found that macroeconomic conditions and sector fundamentals remain the dominant drivers of insolvencies, and that AI adoption is not yet correlated with insolvency trends overall.
But a pattern emerged in smaller, less diversified markets. In Belgium and Sweden, which had the highest AI adoption rates in the sample at 35%, the most digitised sectors also recorded the highest insolvency numbers. In the information and communication sector, the most AI-intensive in the sample at 70% adoption, insolvency figures exceeded the national average in five of the eight countries surveyed.
“Our research suggests that AI adoption can accelerate business insolvencies in smaller and less diversified markets due to the competitive wedge it creates between early adopters and laggards,” said Maxime Lemerle, lead analyst for insolvency research at Allianz Trade.
The finding is based on EU data, and Allianz Trade stops short of drawing a direct line to the UK. But it points to a mechanism worth watching as AI adoption spreads more unevenly across sectors and company sizes, one where the speed of technology uptake, rather than macroeconomic pressure alone, begins to separate which businesses fail and which do not.
