A 6% rise in global business insolvencies in 2026 is set to putter 2 million jobs directly at risk as the war in the Middle East increases non-payment risk for corporates.

Insurer Allianz Trade has published its latest Insolvency Report, which predicts global business insolvencies will rise by 6% in 2026 (6% in 2025) resulting in a 5th consecutive year of growing insolvencies, before plateauing at a high level in 2027.

However, a prolonged conflict in the Middle East would amplify insolvency risks.

“Spillovers from the Middle East crisis will make 2026 the fifth consecutive year of rising global business insolvencies,” the report explained. “The ripple effects of lower growth and higher inflation from the Middle East will account for one-third of this increase. The immediate implications for energy markets, shipping costs and supply chains, as well as second-round effects via inflation, financial conditions and the hit to confidence, have pushed up our forecasts to +6% in 2026 for our Global Insolvency Index (+2pps compared to what was expected before the conflict), with the expected plateau delayed to 2027.”

“Insolvencies in the UK are expected to plateau at 26,550 cases in 2026, remaining 30% above pre-2020 levels due to ongoing economic pressures such as high input costs, rising wages, and elevated interest rates,” said Maxime Darmet, senior economist for the UK, France and US, at Allianz Trade. “Sectoral disparities persist, with declines in construction, hospitality, and retail offset by increases in manufacturing, wholesale, and B2B services. The Middle East conflict has added incremental pressure, slightly reducing the expected decline in insolvencies. However, relief is anticipated in 2027, with a projected -5% drop to 25,300 cases as economic conditions improve. Despite this, insolvencies remain significantly higher than pre-Brexit levels, reflecting the lasting impact of structural challenges such as trade barriers and skills shortages, which continue to weigh heavily on UK businesses.”

The Underwriter said  the Middle East crisis has amplified volatility and uncertainty across energy markets, shipping costs and global supply chains. Beyond the immediate disruption, second round effects point to accelerating inflation, tighter financial conditions, and a deterioration in business confidence.

Aylin Somersan Coqui, CEO of Allianz Trade explained: “This situation is driving up costs across global value chains, from agrifood to manufacturing, healthcare and technology. It also exacerbates pressures on energy-intensive sectors such as transportation, chemicals and metals. The combination of weaker demand, rising input costs and tighter financial conditions is straining companies with weak pricing power, thin margins, high debt levels or structurally higher working capital requirements. Compared to our pre-crisis forecast, the direct toll of the Middle East conflict will be an additional 7,000 global business insolvencies for 2026 and 7,900 for 2027.”

The report said if the Strait of Hormuz remains blocked for longer, second-round effects could amplify with a sustained disruption of global oil and gas supply, as well as other commodity supply shortages (fertilisers, helium). This combined with rising inflation, a drop in confidence and lower growth would push up insolvency risks.

“A sustained and widespread escalation would see global insolvencies increase by +10% in 2026 and +3% in 2027. This would translate into around 4,100 additional insolvency cases in the US and 10,500 in Western Europe over the 2026–2027 period,” added Maxime Lemerle,  lead analyst for insolvency research at Allianz Trade.

“Construction, retail and services would be the main sectors at risk. Europe, with 1.3 million people potentially affected, leads the global count. Western Europe (~960K) and North America (~460K) would both record a 12-year high. Overall, jobs at risk due to business insolvencies would represent 6% of the total number of unemployed people in the US and Europe,” added Lemerle.