The findings have been published in a report by R3, the trade association for the UK’s insolvency, restructuring, advisory, and turnaround professionals.

The quarterly Business Health report, based on data from Creditsafe, found there were 6,854 insolvency-related activities in Q2 2026, down 6% compared to the same period last year and 5% lower than the previous quarter. 

At the same time, 184,873 new UK companies were registered during the quarter, a 6% decrease on Q2 2025 and 2% lower than Q1 2026. 

According to the trade body, the findings point to a business landscape where fewer firms are entering formal distress processes, but where entrepreneurs remain cautious about launching new ventures. 

R3 President and Partner at Knights, Sonia Jordan said: “R3’s latest Business Health report shows a mixed picture of the UK economy. 

“The decline in new companies being formed suggests that many would-be entrepreneurs are taking a wait-and-see approach.

“While insolvency-related activity has fallen, businesses continue to face a range of pressures, from higher employment costs and ongoing geopolitical uncertainty to concerns around consumer demand and cashflow. 

“These factors can all make launching a new business feel like a greater risk than it might have done previously. 

“Although fewer failures are welcome, sustainable economic growth requires both resilient businesses and a healthy pipeline of new enterprises entering the market.”

Construction remained the sector with the highest level of insolvency-related activity in Q2, with 1,177 cases, followed by accommodation and food services (935) and wholesale and retail (885). 

Although all three sectors recorded year-on-year reductions in insolvency activity, they continue to account for a significant proportion of cases. 
The report also highlights growing pressures in some parts of the economy. 

Insolvency-related activity among financial and insurance businesses increased by 19% year-on-year to 194 cases, while the real estate sector saw cases rise by 16% in the first half of 2026 compared with the same period in 2025. 

Regionally, Greater London recorded the highest number of new businesses, with 62,853 start-ups, followed by East Anglia (21,353) and the North West (18,875). 

However, every UK region saw a year-on-year decline in start-up activity, with the sharpest falls recorded in Northern Ireland (-15.7%), Wales (-15.1%) and the North East (-9%).

Greater London also recorded the highest level of insolvency-related activity, with 1,461 cases, followed by the North West (1,044) and East Anglia (914). Most regions experienced year-on-year declines in insolvency activity, led by Wales (-22.0%), the North West (-17.5%) and Northern Ireland (-14.3%).