In 2026, business insolvencies are expected to rise slightly again, against a backdrop of gradually easing financing costs.
Behind this apparent stabilisation lies a still high level of fragility, particularly in the construction, chemical and textile industries.
A rise of just 25 basis points in interest rates on business loans would be enough to upset an easing trend.
“2026 should offer a respite rather than an improvement. The number of insolvencies will not fall. It will simply stop accelerating. If rates were to ease less quickly than anticipated, then stabilisation would immediately disappear,” says Jonathan Steenberg, economist for Northwestern (UKI, Benelux and Nordics) countries at Coface.
2026: a misleading stabilisation
After three years of sustained increases, 2026 should mark a period of calm. Insolvencies will continue to rise, but at a slower pace, helped by the gradual easing of rates and credit conditions.
However, this stabilisation remains fragile: debt levels remain high, margins are compressed and the most exposed sectors continue to show signs of tension.
South Africa: Business closures ease, debt recovery falters
South Africa recorded a total of 1 534 business liquidations in 2025, with most of these closures being voluntary.
This is marginally down by 1,1% from the 1 551 closures reported in 2024 and reflects the ongoing challenges faced by local businesses in a complex and evolving economic environment.
Increase in business closures in December
In December 2025 alone, the country saw 100 business closures, representing an 11,1% increase compared to December 2024.
While the number of liquidations in December was higher year-on-year, the figures were notably lower than those recorded in November 2025.
Sectors most affected by liquidations
Liquidations between October and December 2025 were lower than the same period in 2024, suggesting a slight easing of pressures in the final quarter of the year.
The sectors most affected by liquidations included finance, insurance, real estate, business services, trade, catering and accommodation.
These industries have been particularly vulnerable to the prevailing economic headwinds.
“Interpreting liquidation data in South Africa presents several challenges,” explains Aroni Chaudhuri, Coface chief Africa economist.
“Firstly, official liquidation statistics exclude the informal economy, which plays a significant role in some sectors in South Africa, such as construction.
“Secondly, liquidation figures only capture businesses that have formally entered compulsory or voluntary procedures. Given the country’s substantial regulatory hurdles, many businesses may cease operations without ever being officially liquidated.
“Thirdly, subdued economic growth can lead to a lower level of liquidations, not necessarily because conditions are improving, but because fewer new companies are being created.
“Liquidation is a natural part of the economic cycle, allowing for renewal and market entry. When business creation, especially among SMEs, is constrained, the number of liquidations may also decline.”
80% of businesses struggle to recover debt
A significant proportion of liquidations – one in four – were due to unpaid debt, and it is estimated that 80% of businesses struggle to recover outstanding payments.
This underscores the importance of robust credit management and risk mitigation strategies for South African companies.
Europe: stabilisation highly dependent on financing costs
Germany (+1% in insolvencies for 2026), France and the UK (+2%) are expected to remain at a high level, while Spain (-3%) will benefit from stronger macroeconomic momentum. Italy (-2%) will mainly benefit from the statistical effects of its procedural reforms. In the Netherlands, the increase (+4%) will reflect a gradual return to levels close to those seen before the pandemic.
The continent remains extremely sensitive to the cost of credit, which will largely determine the trajectory for 2026.
North America and Asia-Pacific: relative respite but contrasting trends
In North America, trajectories diverge: in the US (+4%), companies will continue to be affected by a slowing economy and tariff increases, and Canada (-5%) will begin a significant decline after a prolonged cycle of growth.
In Asia-Pacific, Japan (+7%) will continue to be penalised by persistently higher interest rates and several vulnerable sectors, while Australia (+0.5%) is expected to plateau after a strong post-pandemic normalisation.
These dynamics confirm that local shocks – monetary, sectoral or regulatory -will continue to shape defaults in 2026.
A 25-basis point increase would be enough to reverse the trend
The stabilisation expected in 2026 will depend on a steady easing of rates, but the balance remains precarious: companies remain very sensitive to the cost of credit after several years of excessive debt.
A 25-basis point increase in borrowing rates could cause global insolvencies to rise again to around +4-5%, a trend similar to that seen in 2025.
Such a scenario would particularly affect European economies, which are more exposed to variable-rate debt, as well as sectors with low debt servicing capacity such as construction, chemicals and textiles.
This increased sensitivity serves as a reminder that in 2026, the trajectory of insolvencies will depend less on growth than on the pace of monetary adjustment, making the cost of financing the real arbiter of the coming year.
How businesses can respond
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