Britain's high streets are bracing for a fresh wave of financial distress in 2026, with sector experts warning that pressures on shops, restaurants, and leisure operators are set to intensify dramatically.
A Perfect Storm of Rising Costs
Advisory and insolvency professionals have told the Press Association that a combination of new financial burdens will push many businesses to the brink from next April. Changes to business rates and another increase in the national minimum wage are identified as the primary catalysts for an expected surge in corporate failures.
This grim forecast follows official data showing corporate insolvencies have already risen year-on-year. Government figures indicate that insolvencies recorded up to November 2025 were 'slightly higher' than in the whole of 2024, despite a recent month-on-month reduction.
Sectors in the Firing Line
Matthew Richards, joint head of restructuring and insolvency at advisory firm Azets, described the situation as a 'toxic cocktail' of financial issues. He stated that the last quarter of 2025 saw a spike in insolvency enquiries from retail and hospitality, sectors already fighting to stay solvent.
'With new business rates and a higher national minimum wage taking effect from April 2026, we expect retail and hospitality insolvencies to rise as firms struggle to meet the increased expenses,' Richards warned.
This prediction follows a difficult 2025, which saw major brands including River Island, Claire's, and Pizza Hut undergo significant restructuring processes. The trend continued into December, with fast-food chain Leon closing venues after being bought back by its co-founder.
No Breathing Room for Bruised Businesses
Will Wright, UK chief executive at Interpath, which has overseen processes for Claire's and TGI Fridays, concurred with the bleak outlook. He highlighted that companies were hoping for respite after a tough few years but are instead facing intensified pressure.
'Rising operating costs, tighter household budgets and increases to business rates mean that pressure is likely to intensify as we move through 2026,' Wright said. He anticipates a clear uptick in restructuring activity—'not a collapse, but a definite shift.'
Benjamin Wiles, managing director at Kroll, pointed to a 'double squeeze' from cautious consumer spending and escalating employment costs. He characterised 2025 as a year of 'uncertainty,' where a delayed budget prompted a 'wait-and-see' approach. In contrast, 2026 is shaping up to be 'a year of hard decisions.'
Kroll projects that retail administrations for 2025 will finish more than 7% higher than in 2024, signalling a worrying trajectory for the nation's high streets and town centres.
