Drop in West Midlands insolvencies bodes well for 2026 – report

A fall in the number of company insolvencies, as well as drops in the inflation and interest rates, bode well for Midlands businesses as they move into 2026.

This is according to the Midlands branch of the UK’s restructuring, turnaround and insolvency trade body R3 and comes on the back of new statistics published by the government’s Insolvency Service which show that corporate insolvencies in England and Wales decreased by 8 per cent last month to 1,866 compared to the previous month, and by 7 per cent against the November 2024 figure of 2,001.

They were also down by 18 per cent compared to the November 2023 total of 2,273.

R3 Midlands chair Stephen Rome (pictured), a partner at law firm Penningtons Manches Cooper in Birmingham, said: “When considered alongside the drop in the inflation rate to 3.2 per cent and the recent cut in the interest rate to 3.75 per cent, these statistics may give a glimmer of hope to struggling businesses in the run-up to Christmas and offer some cautious optimism that conditions may begin to improve next year.

“That said, company insolvency levels remain stubbornly high compared to five years ago, reflecting difficult trading conditions.

“In addition, the unemployment rate has reached a near six-year high of 5.1 per cent as employers have been delaying recruitment and investment decisions.

“Sustained progress on inflation and employment will be key to restoring confidence in the long term.

“For hospitality businesses in particular, the next few weeks could be make or break time.

“Many face a sharp drop-off in trade after festivities end, with January bringing cashflow pressures caused by the rent quarter and potentially larger supplier, VAT and payroll tax payments reflecting a busy December.

“Our members typically see an increase in enquiries and distress calls from this sector early in the New Year.

“Retailers also face post-Christmas challenges, including high levels of returned goods at a time when wages and other costs still have to be met.

“R3 members remain committed to supporting businesses and individuals through these challenges and to advocating for practical solutions which help ensure long term economic resilience.”