UK business insolvencies begin slow descent after 10-year record high, despite looming trade war threat

• The UK registered 26,708 cases in 2024, marking the first year-on-year decrease (-5%) in three years, after significant rises brought insolvencies to a 10-year record in 2023.
• UK insolvencies expected to continue falling in 2025 (-3%) and 2026 (-7%).
• By contrast, global business insolvencies should rise by +6% in 2025 and +3% in 2026, after +10% in 2024.
• Three factors are behind this rise: the risk of delayed easing of interest rates, the prolonged uncertain environment and the soft rebound in demand.
• Relatively high interest rates and the looming trade war could drive global business insolvencies even higher in the next two years.

Allianz Trade released today its latest Global Insolvency Report and unveils updated forecasts for 2025 and 2026. According to the world’s leading trade credit insurer, global business insolvencies will keep rising over the next two years: after +10% in 2024, they are expected to grow by +6% in 2025 and +3% in 2026. This would result in 5 successive years of increasing insolvencies (2022 – 2026).

UK outlook

The UK bucks both the global and US trends, in which insolvencies will continue to rise. By the end of 2024, UK business insolvencies began to show signs of a downward trend reversal, registering 26,708 cases. It was the first slight decrease (-5%) after three consecutive years of strong rises that pushed insolvencies to a 10-year record in 2023, as firms faced a succession of shocks and challenges, from Brexit-related issues and Covid-19 to strong monetary tightening, sticky inflation and weak economic momentum.

Looking ahead, we expect headline inflation to begin easing towards the end of 2025, as the labour market loosens, and government spending takes effect, which will play a part in declining insolvencies. But the UK’s growth momentum should not recover significantly before 2026, so we expect the various challenges businesses face, including costs, wages and tariff threats, to keep insolvencies high for the next two years, though they are declining. In 2025, we expect a mild decrease (-3%) to 25,900 cases, before a larger relief for firms in 2026 (-7%) to 24,000 cases.

Interestingly, most of the sectors experienced this faster-than-expected trend reversal, notably the largest contributors to the global count – construction (-8%), trade (-9%), hospitality (-6%) and manufacturing (-3%) – while exceptions remained in utilities, information and communication, finance and insurance, and administrative services.
 

Figure 1: UK insolvencies will decline, but remain elevated compared to pre-Covid 19 years

In 2024, business insolvencies increased in four out of five countries

As expected, 2024 recorded another high-speed and broad-based increase in business insolvencies, which meant that most advanced economies have started 2025 with business insolvencies already well above pre-pandemic numbers. According to Allianz Trade, global insolvencies surged by +10% last year (from +7% in 2023), ending 12% above their 2016-2019 average level. The number of business insolvencies increased in four out of five countries, with most recording a double-digit increase.

“North America and Asia both boosted the global rebound, while Western Europe remained a key contributor despite a slower acceleration. In this region, two-thirds of sectors posted a rise in insolvencies in 2024, notably transportation, construction and B2B services, leading close to half of the sectors to surpass their pre-pandemic levels, notably in the most advanced economies. Importantly, 474 large companies^[1] went bankrupt globally last year, making it all the more important for companies to closely monitor the risk of domino effects on suppliers and subcontractors”, states Maxime Lemerle, Lead Analyst for insolvency research at Allianz Trade.
 

Figure 3: Global and regional insolvency indices, yearly change in %

2025-2026: The rise in global business insolvencies is far from over

Looking ahead, Allianz Trade experts expect global business insolvencies to rise again in 2025 and 2026, which would result in 5 successive years of increasing insolvencies (2022 – 2026).

“We expect global business insolvencies to increase by +6% in 2025 and +3% in 2026. This upward adjustment results from the risk of delayed easing of interest rates, increased uncertainty and soft demand. Relatively high interest rates could strain highly leveraged sectors and corporates, as well as those that have specific challenges to finance – such as the green transition, AI competition or supply-chain frictions. At the same time, prolonged uncertainty could leave companies in wait-and-see mode, leading to reduced activity to the detriment of already fragile corporates. Meanwhile, there are also other risk factors, such as the persistent lack of economic momentum and the post-Covid clearance of the backlog of insolvencies. The business environment has rarely been so complex and volatile, and corporates should remain alert to avoid non-payment risk”, explains Aylin Somersan Coqui, CEO of Allianz Trade.

These rises in global business insolvencies could have a significant impact on jobs too: according to Allianz Trade, in 2025, this situation will put 2.3 million jobs directly at risk globally (+120k compared to 2024), before a smaller surge in 2026 (+30k).  Western Europe (1.1mn) would lead this global count, ahead of North America (450k), though this represents a 10-year high for both regions. Asia would follow (320k) with a roughly stable annual number since 2022. Globally, the main sectors at risk are construction, retail and services.  

Risk of interest rates remaining high, and a potential trade war could drive global insolvencies even higher

Expanding credit can help reduce corporate insolvencies by providing businesses with liquidity to manage debt obligations, sustain operations and invest in growth. Access to credit enables firms to refinance liabilities, bridge revenue shortfalls and avoid bankruptcies, particularly during economic downturns. Although, Allianz Trade expects interest rates to decline both in Europe and in the US, inflationary risks, especially in the US could threaten rate cuts. Should borrowing costs rise and make credit less accessible, this could lead to a slowdown in credit growth, tightening financial conditions, and increasing default risks for highly leveraged firms. Allianz Trade's estimates suggest that a 1% decrease in credit results in an increase in insolvencies in the next 3 months by about +3% in the US, +0.4% in Germany, +1% in the UK and 2% in France.  

But according to Allianz Trade, the main upward risk is the trade war looming ahead. “Our insolvency outlook could deteriorate should the European economy perform weaker than expected, with a stronger lack of momentum, or if there is a weaker resilience in APAC and larger headwinds from China, as well as if the outlook for the US deteriorates further. Geopolitics could also be a major factor of turbulence, with the ongoing conflicts in Russia-Ukraine and the Middle East, tensions in the South-China-Sea and with political uncertainties over Taiwan. A full-fledged trade war would increase our insolvency forecast by an additional +2.1pp and +4.8pps, meaning that global business insolvencies would rise by +7.8% and +8.3% in 2025 and 2026 respectively. For 2025-2026, this would mean +6,800 additional cases in the US and +9,100 in Western Europe”, ends Maxime Lemerle.

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Allianz Trade is the global leader in trade credit insurance and a recognized specialist in the areas of surety, collections, structured trade credit and political risk. Our proprietary intelligence network analyses daily changes in +83 million corporates solvency. We give companies the confidence to trade by securing their payments. We compensate your company in the event of a bad debt, but more importantly, we help you avoid bad debt in the first place. Whenever we provide trade credit insurance or other finance solutions, our priority is predictive protection. But, when the unexpected arrives, our AA credit rating means we have the resources, backed by Allianz to provide compensation to maintain your business. Headquartered in Paris, Allianz Trade is present in over 50 countries with 5,700 employees. In 2023, our consolidated turnover was € 3.7 billion and insured global business transactions represented € 1,131 billion in exposure.