Updated on 24 December 2025
Ask the expert: Three structural risks that will keep business insolvencies high in 2026
The global rise in business insolvencies is not just a cyclical correction; it’s driven by structural challenges that will keep failure rates high through 2026. Despite Western Europe showing a modest decrease in 2026, the overall global index is set to rise again by +5%. This FAQ addresses the three critical structural factors that businesses must manage to survive the prolonged economic headwinds.
Summary
Key takeaways
- Growth Gap: The US (+1.6%) and the Eurozone (+0.9%) are expected to fall short of the GDP growth rates needed to stabilize insolvencies in 2026.
- Financing Divide: Persistently high interest rates will widen the gap between well-capitalized large firms and struggling SMEs.
- New Business Fragility: The proliferation of new businesses increases insolvency risk, with startups facing higher financial vulnerability.
- Key Vulnerable Sectors: Historically, Construction accounts for around 20% of all insolvencies , while Automotive is on the watchlist due to technological disruption.
Why is modest economic growth no longer enough?
Answer: Resilient economic growth could remain stubbornly below the threshold needed to stabilize insolvencies. Based on historical standards, the US (+1.6% GDP growth in 2026) and Eurozone (+0.9%) would fall short of the rates needed to prevent insolvency numbers from rising further. This persistent growth gap intensifies competition, erodes pricing power, and squeezes already-thin profit margins for vulnerable firms.
How will financing costs impact small vs. large firms?
Answer: Slow monetary easing is likely to keep financing costs higher for longer. This particularly strains debt-heavy and capital-intensive SMEs, which rely more on bank financing and have thinner liquidity buffers. The financing gap between large and small firms is widening. Large, well-capitalized firms continue to show resilience, while SMEs face limited relief on debt-servicing capabilities. We estimate that credit would need to increase by about +2.5% over 2026 in the US and Germany to stabilize insolvencies.
Is the boom in new business creation increasing overall risk?
Answer: Yes, the acceleration of new business creation, particularly in Europe and the US , significantly heightens insolvency risks. Startups and younger firms face higher intrinsic financial fragility. Furthermore, new market entrants often intensify competition through aggressive pricing, pressuring established firms. The potential for bankruptcies has particularly increased in countries where new businesses are growing faster than bankruptcies, including Italy, France, Portugal, and Belgium.
Which sectors are most vulnerable?
Answer: Construction remains highly exposed to cyclical woes, with the residential segment hampered by high interest rates dampening demand. Historically, the sector accounts for approximately 20% of all insolvencies. Additionally, the Automotive sector is on the watchlist, facing a perfect storm of technological disruption and heightened competition. Services and retail cases were also particularly prevalent in Western Europe and North America in the first three quarters of 2025.
Conclusion
The path to lower insolvency levels is blocked by structural headwinds, meaning businesses cannot afford to "look down" without adequate protection. Understanding the growth gap, financing divide, and demographic shifts is crucial for survival in 2026.
Don't wait for the next shock. Download the Global Insolvency Outlook 2026-27 to secure the strategic intelligence needed to protect your business.
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