Global business insolvencies are expected to increase by five per cent in 2026 before declining by four per cent in 2027, as companies continue to contend with high operating costs, trade tensions and tighter financing conditions, according to a new report from Atradius.
The credit insurance company said the anticipated improvement is unlikely to become apparent until the second half of 2027, with businesses expected to face continued pressure as they adjust to a more challenging economic environment.
The latest Atradius Insolvency Outlook revises the company's 2026 forecast upward and projects a more modest decline in insolvencies next year than previously anticipated. Insolvencies have remained elevated for longer than expected earlier in 2026, the report said.
"The business environment remains challenging as high input costs and trade tensions persist," said Theo Smid, senior economist at Atradius. "Insolvencies are still expected to rise in 2026, based on realised data and our expectations for the remainder of the year. While we expect conditions to begin easing in 2027, this marks the start of a process rather than a full return to normal."
Business pressures expected to persist
Atradius said the projected decline in insolvencies in 2027 does not reflect a substantial improvement in underlying business conditions. Instead, the forecast is based on companies gradually adapting to an environment characterized by higher costs and more restrictive financing.
The report assumes the most vulnerable businesses will leave the market by early 2027, while surviving companies continue to adjust their cost structures, financing arrangements and pricing strategies to manage higher expenses.
Those adjustments are expected to contribute to a reduction in insolvencies, even as broader economic conditions remain challenging. The report describes the anticipated decline as a gradual normalization process rather than a return to previous operating conditions.
The revised outlook suggests that financial pressures will continue to affect businesses into next year, with the pace of improvement varying across regions and individual markets.
Regional outlook varies
Europe and Asia-Pacific are each forecast to record a five per cent decline in insolvencies in 2027, while North America is expected to see a smaller decrease of three per cent, according to Atradius.
Within Europe, the United Kingdom is expected to continue experiencing insolvencies near historically high levels. Businesses there remain under pressure from post-pandemic debt, elevated borrowing costs and weak consumer demand, the report said.
Romania is among the few markets where insolvencies are expected to rise further, reflecting continuing fiscal, political and inflationary pressures.
In Asia-Pacific, Australia and South Korea are expected to account for much of the anticipated improvement as insolvencies ease from historically elevated levels.
The outlook for the United States is also more favourable for 2027, with insolvencies expected to decline as businesses adapt to elevated inflation and interest rates. Atradius said economic growth in the country is expected to remain relatively resilient.
Normalization expected to take time
Although the global forecast points to a decline in insolvencies next year, Atradius said businesses should not interpret the projection as evidence that economic pressures are easing significantly.
The anticipated improvement depends largely on the ability of surviving companies to adjust to higher operating costs and financing expenses, alongside the expected exit of more vulnerable firms from the market.
The company expects signs of normalization to emerge during the second half of 2027, indicating that the period of elevated insolvencies could persist well into next year before conditions begin to improve.
The full Atradius Insolvency Outlook is available at https://group.atradius.com/knowledge-and-research/reports/economic-research-insolvency-outlook-oct-2026.