Challenges and opportunities in 2026
27 January 2026
Against the backdrop of continuing economic uncertainty, the demands on our profession show little signs of easing. As we head into 2026, industry insiders tell us what challenges lie ahead for businesses and the profession, and how well-equipped practitioners are to meet them.
Fragile confidence and sustained market pressure
Many businesses and individuals are entering 2026 with limited resilience after several difficult years. As trading conditions remain challenging and personal debt is at historically high levels due to rising living costs, demand for the services and expertise of R3 members continues.
Tom Russell, R3 President and a licensed insolvency practitioner and director at James Cowper Kreston, says the legacy of recent economic conditions is still being felt:
“2025 was a year in which businesses and individuals struggled to regain their footing after several years of economic challenges. While inflation has eased, the cumulative impact of higher costs, tighter credit conditions and weak demand continues to place significant pressure on cashflow, particularly for smaller and mid-sized businesses with limited financial headroom.
Although recent interest rate reductions are welcome, rising unemployment risks further undermining confidence if the trend continues.”
Professional advice in demand
Feedback from R3 members suggests that pre-insolvency advisory work continues to form an important and growing part of many practices.
Russell adds:
“While margins remain under pressure, demand for professional advice is expected to remain high, particularly in turnaround and restructuring, as R3 members support refinancing and reorganisation to strengthen businesses for the challenges ahead.”
Stephen Jacobs, director, bank support & business recovery at Christie & Co, added:
“The autumn budget further raised employment costs, with above-inflation national minimum wage increases being implemented in April 2026.
The knock-on effect will be decreasing creditor serviceability, leading to increased demand for restructuring and insolvency services from both debt funders and directors. Those who take early action will have more options, time, and resources for recovery rather than waiting until a crisis point, which will significantly limit the potential for a successful turnaround.
The challenging macroeconomic landscape in 2025 is likely to continue into 2026.”
Policy uncertainty has also influenced behaviour. Over the past year, many business owners brought forward decisions to cease trading and enter a solvent liquidation in anticipation of potential changes, particularly around capital gains tax, according to Russell.
“Even where changes did not materialise, the uncertainty itself was enough to prompt action, contributing to a high volume of solvent liquidations. If business confidence improves this year, it may incentivise owners to continue with their companies, but only time will tell,” he said.
Sectoral impacts are uneven
Meanwhile, sectoral divergence is also becoming more pronounced as Danny Dartnaill, restructuring advisory partner at BDO, explains:
“In the UK, whilst recently released market growth data is encouraging, the macro picture is volatile with the ever-present threat of short-term instability. This is making it difficult for business to make long term investment decisions for sustainable growth and efficient operations.
Some sectors are more resilient and able to weather the storm whereas others are facing pressure from all sides. The retail, leisure and hospitality sectors, for example, are having to contend with increased taxes, supply chain disruption and fragile consumer confidence.
For businesses that have already been through a restructuring process (or two!) there may be minimal opportunities for further cost reduction, rationalisation or balance sheet reconstruction.”
Globalisation adds complexity
Dartnaill also notes that globalisation is adding complexity to restructuring and insolvency work saying:
“Ever increasing levels of globalisation will mean more complex cross border insolvencies or restructurings. These projects can be difficult to navigate and often require multi-jurisdictional teams to provide expert advice and opinions. Conflict between competing procedures and multiple classes of stakeholders are inevitable.”
Skills, scrutiny and demonstrating value
Alongside market pressures, the profession continues to face challenges around recruitment, training and rising scrutiny.
Caroline Sumner, chief executive of R3, highlights recruitment and skills as a key priority:
“Recruitment and training remain a challenge across the insolvency profession. R3 recently surveyed members on routes into the profession and progression to becoming an insolvency practitioner, to better understand how we can support firms in attracting, retaining and developing the next generation of professionals.”
She also points to the importance of demonstrating the profession’s wider value:
“This year marks the 40th anniversary of the Insolvency Act and a lot has changed in that time. To mark the milestone, R3 is launching its Value of the Profession survey, which aims to quantify the contribution insolvency and restructuring professionals make to the wider economy. The results will help us to demonstrate to government, regulators and other stakeholders the value members bring in terms of returns to creditors, jobs saved and businesses rescued. I would encourage all members to look out for the survey in their inbox and to take part, helping to demonstrate the vital role the profession plays.”
Looking ahead
Conversations with those working with distressed businesses and individuals point to growing optimism about the profession’s ability to adapt and respond. As economic uncertainty persists, restructuring, turnaround and insolvency professionals will continue to play a crucial role in helping businesses navigate distress, preserve value where possible and support wider economic stability.
