There are warnings that 213,000 UK jobs are at risk due to business insolvencies, as new research predicted the  global figure will hit a figure close to 3 million.

Insurer Allianz Trade has published its latest Insolvency Report, unveiling updated forecasts for 2026, 2027, and the outlook for 2028. According to report, global business insolvencies will rise by +5% in 2026 and +1% in 2027 (+6% in 2025), marking five consecutive years of increases. Given the uncertain geopolitical and macroeconomic environment, the peak in insolvencies will be delayed by one year to 2028 (-1%), slightly retreating from very high levels.

“In the UK, we expect business insolvencies to continue its gradual stabilisation. Insolvencies should reverse their five-year upward trend in 2026 with a 4% decline to 25,600 cases, followed by a further 3% decrease to approximately 24,800 in 2027,” Allianz added.

Despite these projected declines, the report added insolvencies would remain above the levels observed before the succession of shocks and challenges that have impacted companies since Brexit. The economy will remain constrained by tighter financial conditions, high inflation and weak supply side, keeping the pressure notably on the sectors that already proved in 2026 to be large contributors to the total count in business insolvencies (construction, real estate, trade, hospitality and accommodation). Business insolvencies would remain 21% above pre-pandemic averages in 2027.

Allianz said several structural factors explain this persistence. With enduring tensions in the Middle East, GDP growth is expected to underperform compared to the 2023-2025 period, while energy costs remain high and governments offer limited fiscal support. In parallel, monetary policy is getting tighter, with higher-for-longer interest rates putting further pressure on the most vulnerable companies. At the same time, the stock of active companies expanded by roughly 10% between 2021 and 2025. This broadens the pool of companies exposed to failure, as many of these young entrants are financially fragile: fewer than half of new companies survive beyond five years in Europe.

Commenting in the report’s conclusions Aylin Somersan Coqui, CEO of Allianz Trade explained: “With multiple shocks compounding since the start of the year, much higher-than-expected interest rates are ramping up the pressure on already fragile companies and this will continue: 60% of countries will maintain higher policy rates in 2027 than in the prior 12 to 24 months, inflating funding costs and squeezing margins. In Western Europe, a +100bp rise in bank lending rates would add between EUR 6bn and EUR 10bn in interest expenses, reducing margins particularly in renewables, telecom, and power. Meanwhile, higher-for-longer energy costs will also intensify the pressure on profitability, especially for energy-intensive European industries.

According to Allianz Trade, roughly 2.7 million jobs are directly at risk in 2026 and 2027. This represents a +180,000 increase compared with 2025, and a +700,000 increase compared with 2023, the first year of the post-Covid rebound in global insolvencies.

“Overall, construction, retail, and services are the most exposed sectors. Europe accounts for almost 60% of jobs at risk (1.6 million) with France, Germany, and the UK leading the way. North America follows, representing 24% of total impacted jobs (650,000). For both regions, this would be a 13-year high. In Asia, the impact is real but more moderate, as the region accounts for only 11% of jobs at risk (305,000)”, added Maxime Lemerle,  Lead Analyst for insolvency research at Allianz Trade.

Lemerle concluded: “Our research suggests that AI adoption can accelerate business insolvencies in smaller and less diversified markets due to the competitive wedge it creates between early adopters and laggards. In Belgium and Sweden, which have the highest AI adoption rate in our sample (35%), we observe that the most digitized sectors are also those recording the highest insolvency numbers. The same pattern emerges from a sector perspective. Information & Communication, which is the most AI-intensive sector in our sample (70% adoption), shows higher insolvency figures than the national average in five of the eight countries surveyed.”

The warning came as the latest Red Flag Alert research from  financial and real estate advisory group, BTG, has revealed that the number of UK businesses in ‘significant’ financial distress increased by 1.6% year-on-year to a record 738,144 in Q3 2026. The findings indicate the extent of the financial pressures facing businesses as the Autumn Budget approaches.

Julie Palmer, Managing Partner at BTG, said: “Record levels of ‘significant’ financial distress underline just how many businesses are approaching the Autumn Budget with limited financial headroom. While firms will naturally be looking for clarity on taxation and economic policy, many of the pressures they face extend well beyond any single Budget announcement.

“My real concern is for consumer-facing sectors such as leisure and hospitality, particularly as we enter the run up to the vital Christmas trading period. Higher employment costs, rising inflation and interest rates will add real-world pressure to many domestic budgets. Add into that a forecast 26% rise in the January 2027 energy price cap and households are likely to concentrate on the essentials.