UK trading credit insurance giant Atradius has reported a 1% year-on-year decrease in payment defaults across all sectors, covering the period from May 2024 to May 2025.
The data points to emerging signs of stabilisation in the broader economy, despite persistent inflation, elevated operating costs, and uncertainty in global markets.
The largest year-on-year reductions in payment claims were observed in agriculture, electronics, and transport. Agriculture recorded a 57% drop, while electronics and transport saw declines of 50% and 30% respectively.
In agriculture, Atradius noted that improved purchasing power and stabilising interest rates contributed to the reduction in defaults. However, the sector continues to face working capital challenges. Slow-moving inventory and delays in receivables remain pressure points.
Findings from the Atradius Payment Practices Barometer, a global survey on B2B payment behaviour, also showed that 43% of UK agri-food businesses expect an increase in insolvency risk, citing economic uncertainty and disruptions to trade and supply chains.
The electronics sector saw a 50% year-on-year decline in defaults, along with a 46% fall in claims from April to May 2025. Although performance has improved, data from the Manufacturing Health Index by Unleashed indicates that electronic manufacturers experienced a 23% drop in both sales and profit margins. The sector’s trajectory remains tied to continued investment in R&D and industry collaboration.
James Burgess (pictured above), head of commercial UK at Atradius, said that the decline in payment defaults, particularly in sectors that have faced significant challenges over the past year, paint a good picture of what’s to come.
“It’s reassuring to see a decline in payment defaults, particularly in sectors that have faced significant challenges over the past year. These early indicators of recovery are encouraging, but caution remains key,” he said.
Previous data from Atradius covering November 2024 also supports the improvement in electronics, where a 35% drop in payment defaults coincided with a seasonal uplift in sales. That period saw an £8 million increase in revenue from items such as headphones and smartwatches during Black Friday trading.
Beyond these, the financial services industry also experienced marked improvements. In November, Atradius reported a 75% drop in payment defaults within the sector. This was the steepest decline across all UK industries at the time and was attributed to a more predictable lending environment brought about by steadying inflation and interest rates moving closer to the Bank of England’s 2% target.
The Payment Practices Barometer also found that 51% of B2B invoices in the UK remain overdue. Key reasons cited include customer liquidity constraints (34%), inefficiencies in processes (28%), and invoice disputes (27%).
In response, businesses have reduced the volume of credit offered to customers, with credit sales now representing 49% of B2B transactions. This adjustment has contributed to 60% of companies lowering their Days Sales Outstanding (DSO), helping to improve cash flow conditions.
The broader trade credit insurance market has remained relatively stable over the long term, according to sector data. Since 2015, the global credit insurance industry has maintained an average net combined ratio of 78%, reflecting consistent underwriting profitability.
Premiums grew at a compound annual rate of 14% from 2019 to 2023. These figures indicate sustained demand for credit insurance products and reinforce the role such coverage plays in risk transfer and capital protection across sectors.
“Consumers are still dealing with high prices, and we’ve yet to see a meaningful drop in interest rates. Businesses must stay vigilant against insolvency risks, especially in the second half of the year,” Burgess said.
What are your thoughts on this story? Please feel free to share your comments below.
