Business failures have risen for four straight years, and Allianz Research's latest outlook makes clear the climb is slowing but not stopping. In Global Insolvencies Outlook 2028: Higher rates, higher energy bills, higher insolvencies1 (Allianz Research, 27 Oct. 2026), economists Ana Boata, Maxime Lemerle and Ano Kuhanathan lay out a world where insolvencies settle at an elevated plateau rather than retreat — a distinction advisors tracking credit, equities and sector exposure cannot afford to miss.
The Numbers, Decelerating But Still Climbing
The team's headline figure captures the story in miniature: the Global Insolvency Index is set to rise "by +5% this year (broadly in line with our previous estimate), down from +6% in 2025 and +10% in 2024, leaving it 21% above its pre-pandemic average." Two regions are doing the heavy lifting. "North America and Asia-Pacific now drive 79% of the global increase," with "the US is the main engine, accelerating to +12% (from +7% last year), while Canada keeps declining (-3%)". Western Europe adds its own weight: "Western Europe adds 15% to the global increase: +4% regionally, led by Germany (+8%) and France (+3%), with five countries - including France (about 71,000 cases), Switzerland (15,000) and Australia (11,850) - reaching their highest levels since 2000."
Large corporates are not shielded. "Through the first three quarters of 2026, 376 firms with turnover above EUR50mn have gone insolvent, more than one every 18 hours. That's a record that surpasses the 2024 peak by 38 cases." "Retail (69 cases), services (62) and construction (51) bear the brunt, accounting for nearly half of the total." Yet there are early cracks in the uniformity: "Only 43% of 216 monitored sectors posted year-on-year rises in Q2, down from over 60% on average through 2024."
Jobs on the Line
Beyond the balance sheets sits a human cost. The team calculates "roughly 2.7mn jobs are directly at risk worldwide in each year over 2026-2027, up 180,000 from 2025 and a 13-year high in both Europe and North America," split between "2.3mn jobs at risk due to companies being liquidated in and 0.4mn due to restructuring." Europe shoulders the biggest share — "Europe accounts for 1.6mn, with France (about 268,000), Germany (239,000) and the UK (213,000) first in line" — and the toll is uneven, representing "8% of the unemployed in the US and 6% in Europe, but the picture varies enormously by country, from just 1% in Spain versus 10% in both France and the UK."
Why Relief Stays Scarce
Looking to 2027-2028, the authors are candid about the limits of recovery: "We do not expect a meaningful decline in business insolvencies anytime soon. Our headline index is forecast to edge up by +1% in 2027 (+1pp compared to our previous estimate) before dipping just -1% in 2028. 2028 will be mark the first year without a meaningful increase since 2022 but it is hardly a recovery." Structural forces are doing as much work as cyclical ones: the stock of active firms has "expanded by roughly 10% between 2021 and 2025, broadening the pool of companies exposed to failure – fewer than half of young companies survive five years in Europe."
Rates remain the chokehold. "Higher-for-longer interest rates are choking the most vulnerable firms... Already, 16% of US sectors and 25% of European ones have an interest coverage ratio below 3 and a shock of 400bps in the US or 300bps in Europe would push the rest under." Energy compounds the squeeze: "The 60% rise in energy costs since January 2026 has hit transportation hardest, with net margins falling by about -17pps in air transport (US and Europe)."
AI: Not Yet a Macro Driver, But Watch the Edges
The report's most forward-looking section flags artificial intelligence as an emerging — if still marginal — force. "AI Darwinism is not yet a visible driver of insolvencies at the macro level, but there are some signals coming from smaller markets and early adopter sectors." Belgium and Sweden stand out: these markets, "which have the highest average AI adoption (~35%), show a clear positive link between AI intensity and worsening insolvency trends," while "Information & communication, the most AI-intensive sector with 70% adoption, could be the canary in the coal mine: it shows worse insolvency performance than the national average in five of eight countries surveyed." A downside AI scenario, modeled on the dot-com bust, "would lead to an additional +9,300 insolvencies in the US and Western Europe in 2027."
Five Key Takeaways for Advisors and Investors
- Expect a plateau, not a reprieve. The index stays ~22% above pre-pandemic norms through 2028 — elevated credit and counterparty risk is now structural, not cyclical.
- Watch large-cap exposure in retail, services and construction. These sectors drive nearly half of major insolvencies and carry supply-chain contagion risk for smaller suppliers.
- US and Western Europe diverge from here. The US accelerates (+4% in 2027) while Western Europe edges down (-1%) — portfolio and credit positioning should reflect that split.
- Rate-sensitive SMEs remain fragile. With interest coverage ratios already thin across a quarter of European sectors, refinancing risk is concentrated and persistent.
- AI adoption is a double-edged signal. In smaller, less diversified economies, high AI uptake correlates with rising insolvencies among laggards — a factor worth screening into sector and country allocation.
Footnote:
1 Boata, Ana, Maxime Lemerle, and Ano Kuhanathan. Global Insolvencies Outlook 2028: Higher Rates, Higher Energy Bills, Higher Insolvencies. Allianz Research, 27 Oct. 2026, https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/economic-research/publications/specials/en/2026/october/20261027-Insolvencies-AZ.pdf.
