Fewer UK businesses tipped into formal insolvency processes between April and June. The catch is that fewer new ones were being set up either.
R3, the trade body for insolvency, restructuring, advisory and turnaround professionals, counted 6,854 insolvency-related activities in the second quarter of 2026 in its quarterly Business Health report, which draws on Creditsafe data. That figure sits 6% below the same quarter last year and 5% under the first quarter of this year.
Company registrations moved in step rather than in opposition. Some 184,873 new UK companies were incorporated over the three months, down 6% on Q2 2025 and 2% on the previous quarter.
R3 reads the two numbers together as a picture of an economy where fewer firms are being pushed into formal distress, while the people who might start something new are holding off.
Sonia Jordan, R3 president and a partner at Knights, called it “a mixed picture of the UK economy”. The fall in company formations, she said, points to would-be entrepreneurs waiting to see what happens next. She listed higher employment costs, geopolitical uncertainty, questions over consumer demand and cashflow pressure as the factors making a launch feel like a bigger gamble than it used to. Fewer failures are welcome, Jordan added, but growth needs businesses that can take a hit and a steady supply of new entrants behind them.
Which sectors are struggling
Construction again recorded the most insolvency-related activity, with 1,177 cases. Accommodation and food services followed on 935, then wholesale and retail on 885. All three improved on last year’s figures, yet between them they still account for a large slice of the national total.
Two parts of the economy went the other way. Financial and insurance businesses recorded 194 cases, up 19% year on year. Real estate cases rose 16% across the first half of 2026 compared with the same months in 2025.
The regional split
Greater London produced the most new businesses at 62,853, ahead of East Anglia on 21,353 and the North West on 18,875. Not one region managed a year-on-year increase. Northern Ireland saw the steepest drop at 15.7%, with Wales close behind on 15.1% and the North East down 9%.
London also topped the insolvency table with 1,461 cases, followed by the North West (1,044) and East Anglia (914). Most regions recorded declines here, led by Wales on 22%, the North West on 17.5% and Northern Ireland on 14.3%.
Worth noting that Wales and Northern Ireland appear near the top of both lists, with sharp falls in insolvencies and equally sharp falls in new company formations. Less failure, less activity.
