Let’s begin with cold hard financial facts;
UK borrowing is running at £20.2Billion per month, a five year high. That peak was during Covid times too.
The UK manufacturing sector continues its long term downward spiral.
The services sector Purchasing Managers Index has slowed down as fears about taxes, the Budget, inflation and more delay investment. Report here.
UK Govt debt interest payments are £111bn a year, according to the OBR.
What is the outlook for business large and small? Not that good, as each employee costs more than ever in taxation, even down to a car park space. NI threshold changes mean part-time staff require more admin collection by small businesses, that means time and accountancy money. Retailers face a shoplifting epidemic as Courts refuse to jail repeat offenders. UK based car manufacturing, indeed EU car production, faces an existential challenge from Chinese brands. Regulation increases exponentially year-on-year, adding costs to the consumer prices being charged -just look at food prices since 2023; many items have doubled in price. Wages have not.
As Allianz Trade says below, insolvencies will rise and IE agrees. This is especially true this winter, as many businesses will look at the extra costs and taxes announced by Reeves and think, `why bother?’ Expect sickness benefits clams to skyrocket in January 2026 as small traders and the self employed realise the costs involved in Making Tax Digital compliance.
For insurance brands, the outlook is brighter. Many are making hundreds of millions each year, plus enjoy a market that is defined by legal/regulatory coercion on Motor, Commercial, Events, Retail, Healthcare etc. But a pain point will be reached for many businesses and one thing that goes is `unnecessary’ insurance products. Expect more fires, more claims on empty retail/commercial/heritage premises this winter as well. The brutal truth is the UK cannot run on a bloated public sector served by a freelance Deliveroo workforce indefinitely.
At some point a coherent plan to cut State debt and invest in North Sea oil/gas, AI tech, premium product manufacturing etc. to regenerate large sectors of the economy via State backed loans has to happen. Millions of admin, marketing, PR, DEI jobs across the public sector and quangos have to be automated/abolished via AI to reduce the headcount by 3 million. Overseas Aid cut completely, benefits access restricted to those who have paid NI for 10 years.
A 21st century Marshall Plan basically. Or the ship sinks.
Here’s the word;
Allianz Trade releases its latest Insolvency Report, analysing the impact of recent US tariffs and global trade shifts on business insolvencies, and unveiling updated forecasts through 2027. According to the world’s leading trade credit insurer, global business insolvencies will end 2025 on a high (+6%), with a peak expected in 2026, marking a fifth consecutive rise in insolvencies (+5%). For 2027, Allianz Trade expects a modest decline (-1%).
UK outlook: Long-term insolvency pain amid slow growth
Some 27,650 UK businesses are expected to become insolvent in 2025, a figure that remains just shy of the 12-year record of 28,100 cases posted in 2024. Despite this, the UK is still faring better than many of its global counterparts with insolvencies set to dip to 25,900 in 2026.
While global insolvencies are forecast to rise by +6% in 2025 and +5% in 2026, the UK is expected to plateau at around 31% above pre-pandemic levels through 2024 and 2025. This is a sign of persistent strain on British businesses, but also of relative resilience compared to export-driven economies such as France, Spain and Canada, which are facing sharper increases.
Maxime Darmet, Senior Economist for the UK, France and US, Allianz Trade said:
“Higher costs, wages and taxes dragging on business’ resources are a major driver of these insolvencies. Cutting National Insurance Contributions (NICs) for employers would be impactful, with lower contributions strengthening business competitiveness. However, the recent increase in employer NICs runs counter to this objective.”
Sector-specific trends reveal a split picture with UK manufacturing, wholesale and agriculture continuing to see rising insolvency numbers, while hospitality, transport, real estate, information & communication, and construction sectors will remain at historically high levels despite some easing.
Looking ahead, Allianz Trade forecasts a modest decline in UK insolvencies: 25,900 cases in 2026 (-3%) and 24,500 in 2027 (-5%). Yet even these figures remain well above pre-pandemic norms – 26% and 20% higher, respectively – underscoring the long tail of economic shocks since Brexit.
Tariffs: delayed impact, persisting risk
The Trump administration’s sweeping import duties, which will reach an effective rate of 14% by year-end, are having a heterogeneous impact on businesses. US corporates have been quite protected for now, benefiting from foreign exporters’ price adjustments and the widespread rerouting of goods through third countries such as India and Vietnam, keeping costs and bankruptcies contained. However, if global trade slows down, several economies that lean heavily on exports could feel the pinch.
“Over the first half of 2025, the protective effects of tariffs and its mild pass-through helped decrease US insolvencies by -4pps, while positive demand offset most negative effects. But export-driven economies are expected to see rising insolvencies: In the worst-case scenario, Canada could see an additional +1,900 insolvent companies, France +6,000, Spain up to +2,900 and the Netherlands +700. In contrast, we find negligible impact in Germany, the UK, Italy, and Belgium, either due to diversified export markets, a higher domestic base or stronger financial positions”, states Maxime Lemerle, Lead Analyst for Insolvency Research at Allianz Trade.
A stronger rise in 2026
This outlook leads Allianz Trade to maintain its global business insolvency forecast for 2025, with a +6% rise expected. This follows a +10% increase in 2024, meaning that global insolvencies will reach their highest level since 2019 and stand +19% above pre-pandemic averages. Year-to-date data already show significant increases across regions, particularly in Asia and Western Europe, with notable jumps in Italy (+38%) and Switzerland (+26%). But what about 2026?
“As mitigation strategies wear thin and secondary effects kick in, the trade war’s effects could soon test corporates’ resilience. Risks of domino effects, through rising number of large insolvencies, are increasing too. This results in heightened non-payment risks: we now expect global business insolvencies to rise by +5% in 2026, up from +3% in our previous forecast. With this fifth consecutive increase, levels will stand about 24% above the pre-pandemic average. However, though the recovery will be gradual, the trend may shift in 2027, with a -1% decline in global business insolvencies”, explains Aylin Somersan Coqui, CEO of Allianz Trade.
The tech and AI boom could fuel further insolvencies
Over the last few years, business creation has accelerated, particularly in Europe, where new registrations were 9% higher in 2021-2024 compared to 2016-2019, and in the US where business applications are 36% higher. This proliferation of new businesses increases insolvency risks through multiple mechanisms.
“In the aftermath of the pandemic, some countries saw a sharp increase in business creation due to faster digitalization and the rise of the gig economy. This is increasing bankruptcy risks in Italy, France, Portugal and, to a lesser extent, in Belgium. Moreover, we estimate that an end to the AI-induced boom, a shock similar to the dotcom bubble, could lead to an extra +4,500 insolvent companies in the US, +4,000 in Germany, +1,000 in France and +1,100 in the UK”, ends Ano Kuhanathan, Head of Corporate Research at Allianz Trade.
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