Allianz Trade has released its latest Insolvency Report, providing an analysis of the effects of recent US tariffs, global trade shifts, and updated forecasts for business insolvencies through 2027.
The trade credit insurer projects that global business insolvencies will end 2025 up by 6%, with a peak anticipated in 2026, marking a fifth consecutive annual rise at 5%. A modest decline of 1% is forecast for 2027.
The UK is expected to stabilise in 2025, but could face 1,100 additional insolvencies if an AI bubble bursts. A credit growth increase of 2.5% in 2026 could reduce UK insolvencies by 2.5 percentage points. The Eurozone’s GDP growth forecast of 0.9% in 2026 remains below the level needed to stabilise insolvency trends.
Construction accounts for 18% of UK insolvencies, and tighter fiscal conditions could place further pressure on the sector. The automotive industry may also face stress from technological disruption and competition, especially if subsidies are reduced. In Europe, new business registrations were 9% higher from 2021 to 2024 than in 2016–2019, adding to insolvency risks.
Allianz Trade estimates that 27,650 UK businesses will become insolvent in 2025, just below the 12-year record of 28,100 cases in 2024. Insolvencies are forecast to dip to 25,900 in 2026. While global insolvencies are set 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.
Maxime Darmet, senior economist for the UK, France and US at 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.”
France could see an increase of 6,000 insolvencies due to export declines, while Spain and the Netherlands may face up to 2,900 and 700 additional cases, respectively. Germany, the UK, Italy, and Belgium are expected to experience negligible impacts from reduced exports, supported by diversified markets and stronger domestic bases.
Italy has recorded a notable year-to-date rise of 38% in insolvencies, and Switzerland is up by 26%. Germany is projected to add 2,500 more insolvencies in 2025, with a potential 10% increase in 2026.
The imposition of tariffs were expected to increase costs for raw materials and manufactured goods, which has a direct impact on claims costs for insurers, particularly in auto and property insurance lines. Supply chain disruptions and material shortages are contributing factors, and insurers are monitoring these developments as they affect both claims and premium pricing.
While property and casualty insurers are directly affected by these cost increases, life and health insurers are more likely to experience indirect effects. Financial market volatility and changes in investment sentiment, driven by tariff-related uncertainty, can influence portfolio valuations and policyholder behaviour.
Globally, insolvencies are projected to rise by 6% in 2025 and 5% in 2026, before a slight 1% decline in 2027. The year 2026 will mark five consecutive years of increases, with levels 24% above pre-pandemic averages. In the first three quarters of 2025, 327 major insolvencies were recorded, averaging one every 20 hours.
Persistent divergence is expected, with the US and China driving global increases, while Western Europe begins to moderate with a 2% decline in 2026. Growth, financing, and fiscal factors remain key headwinds, with construction and automotive sectors identified as particularly at risk.
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