UK companies are reportedly bucking a trend of rising global insolvencies, with UK company collapses falling last year and forecast to drop over the next two years. By contrast, worldwide insolvencies significantly increasing during 2024 and expected to rise further still in 2025 and 2026.
The data from Allianz Trade’s Global Insolvency report showed that there was a 10 per cent increase in global insolvencies during 2024. This was an acceleration from the 7 per cent increase recorded in 2023, with insolvencies up 12 per cent from the average levels recorded in 2016 to 2019, prior to the COVID-19 pandemic.
According to the report, insolvencies are expected to increase by a further 6 per cent in 2025 and 3 per cent in 2026. Should this prediction be borne out, Allianz say that it would mean five successive years of increasing global insolvencies, with the figure rising every year from 2022 to 2026.
Aylin Somersan Coqui, CEO of Allianz Trade commented: “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.”
According to Allianz, four out of five countries saw an increase in insolvencies during 2024, with most seeing a double-digit increase. Allianz Trade’s Lead Analyst for Insolvency Research, Maxime Lemerle, stated that North America and Asia both boosted the figures, while Western Europe was “a key contributor despite a slower acceleration.”
Despite UK companies continuing to see high insolvency levels and facing significant headwinds, the UK bucked the trend of rising insolvencies, with a five per cent dip to 26,708 and further decreases forecast over the coming two years.
It should be noted that 2024’s UK figure represented the first drop in three years, following major consecutive increases that resulted in 2023 setting a 10-year record for company collapses. Soaring insolvencies came in the face of a series of major shocks and headwinds, including issues arising from Brexit, the impact of the COVID-19 pandemic, persistently high inflation, high interest rates and weak consumer confidence.
While many of these challenges remain prevalent, inflation is expected to begin easing towards the end of this year, leading to a forecast of a slight decrease of 3 per cent to 25,900 insolvencies.
The UK’s growth momentum is not expected to see a concerted recovery until next year, as companies face challenges including rising costs and the threat of tariffs. However, with hopes that growth will begin recovering in earnest next year, 2026 is forecast to see a more substantial 7 per cent drop in insolvencies to 24,000.
With small UK businesses bearing the brunt of high insolvencies, SME owners are being urged to seek advice to help them strengthen and adapt
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