Insolvency statistics show an increase in corporate distress

An increase in the monthly number of company insolvencies, as well as a rise in the unemployment rate and slow GDP growth, highlight the continued financial strain facing businesses as 2026 begins.

This is according to the North West chair of the UK’s restructuring, turnaround and insolvency trade body R3.

It comes of the back of new statistics published by the government’s Insolvency Service showing that corporate insolvencies in England and Wales increased by four per cent last month to 1,744 compared to the previous month. However, January’s figure was 14 per cent down on the same month in 2025. 

Mark Davies, chair of R3 in the North West and head of restructuring and insolvency at Aaron and Partners LLP, said: “January is often a tough month financially for businesses and the latest monthly rise in insolvencies reflect the dismal, rain-soaked start to the year the UK has endured.

"However, there is a ray of sunshine with corporate insolvencies 14 per cent lower than the same month in the previous year (2,028 in January 2025). 

“Businesses across several sectors haven’t had the results from the ‘Golden Quarter’ boost they had hoped for. As a result, January has slightly become a tipping point, where high costs, disappointing sales and year-end financial pressures converge.

“Meanwhile, the unemployment rate has reached a five year high of 5.2 per cent and GDP also grew slowly at 0.1 per cent in December, with construction, recording its worst performance in more than four years.

"This reinforces the findings of R3’s Annual Business Health report which identified construction as the most distressed sector in 2025.

“Small and medium size (SME) businesses are particularly exposed to cashflow pressures and late payments, with construction firms especially affected.

"A recent report by the Business and Trade Committee found SMEs are owed tens of billions of pounds in unpaid invoices and noted that late payments are responsible for the closure of 38 UK businesses every day, a trend reflected in today’s figures.”

“Unfortunately, our members’ experience shows that many businesses delay seeking professional advice, often due to embarrassment or a hope that the situation will improve.

"However, getting advice from an R3 member at an early stage significantly increases the options available and the likelihood of stabilising finances before problems become unmanageable.”