The first half of 2026 has presented a mixed picture for UK businesses. While pressures have remained in many parts of the market, there have also been signs of stabilisation, with some sectors showing resilience despite a demanding trading environment. Even so, conditions remain uneven, with cashflow management and sector-specific challenges continuing to shape the outlook.
In March alone, company insolvencies in England and Wales reached 2,022, up 7% month on month, while the official May insolvency figures showed that hospitality and construction together accounted for close to a third of all company insolvencies that month.
As PKF Littlejohn Advisory [1] has observed, the key themes remain cost pressure, creditor demands and the need for companies to act early when warning signs begin to emerge. Higher operating costs, delayed payments, labour costs and tighter funding conditions are also still shaping a challenging backdrop for many businesses, even as some parts of the market show resilience.
However, the insolvency numbers only tell part of the story. What PKF Littlejohn Advisory continues to see through live mandates is that these pressures are not landing evenly. They are playing out differently across sectors, depending on the resilience of business models, the strength of customer demand and the ability of management teams to protect cashflow.
Construction: resilience under pressure
Construction remains one of the clearest examples of how financial strain can build over time before becoming acute. In a construction company that recently went insolvent, PKF Littlejohn Advisory highlighted the impact of increasing costs, delays to schemes and wider market uncertainty, all of which had placed significant strain on cashflow and operations in a labour-intensive, subcontractor-reliant business with substantial revenues and a large workforce.
That case reflects a wider reality across the sector. Construction businesses remain especially exposed to delayed payments, cost inflation, contract risk and pipeline uncertainty. When project flow is strong, subcontractor-heavy models can appear robust. When sites slow, payment cycles lengthen or costs move unexpectedly, margins compress quickly and working capital can come under severe pressure.
Hospitality and leisure: little margin for error
Hospitality faces a different set of pressures, but the same fundamental challenge: there is often very little room for error. Recent insolvency data shows the sector remains heavily exposed, which is unsurprising given the combination of payroll intensity, discretionary spend sensitivity, rates and operating costs, and persistent margin pressure. According to the UK government's May 2026 insolvency statistics, construction and accommodation and food service activities together accounted for 31% of company insolvency cases with industry captured in the 12 months to May 2026, underlining how concentrated that pressure remains.
Recent case studies in service-led and people-intensive businesses also reinforce the importance of cash discipline in sectors where demand can fluctuate and fixed costs are hard to reduce quickly. For hospitality operators in particular, a softening in consumer confidence can feed through rapidly to occupancy, covers, bookings and profitability.
Leisure businesses are facing a similarly demanding environment. In one recent appointment involving a luxury holiday operator, PKF Littlejohn Advisory was brought in to support a business spanning accommodation, day-hire services and in-house asset development. Cases of this kind highlight the complexity of the leisure market. Even where a brand is established and customer demand remains present, operators can still come under pressure if bookings soften, financing costs rise, or an asset-heavy model leaves too little flexibility when trading conditions tighten. For seasonal businesses in particular, a weaker period can be difficult to recover from quickly.
Haulage and logistics: persistent headwinds
Haulage and logistics is another sector where pressure is proving persistent rather than temporary. In one recent transport client, PKF Littlejohn Advisory's work involved a business employing more than 100 people across five depots, against a backdrop of significant headwinds including spikes in fuel costs.
A separate appointment tied to transport and driver supply also pointed to another important trend: businesses across multiple sectors are reducing their reliance on external suppliers, directly affecting firms that support logistics, warehousing and distribution networks.
In practical terms, that means operators across haulage and logistics are contending with fuel and wage pressure, contract margin compression, utilisation risk, customer concentration and the knock-on effect of wider weakness in construction, retail and industrial activity.
What the rest of 2026 may bring
Looking ahead, there are a number of reasons to be measured rather than alarmist. May's fall in registered company insolvencies was a welcome sign, but it does not yet point to a decisive change in direction. PKF Littlejohn Advisory's own view is that many businesses are still operating in a challenging environment, and insolvency levels may remain elevated into mid-2026 if current trends continue.
For construction, that likely means continued fragility unless payment discipline improves and project confidence strengthens. For hospitality and leisure, the outlook remains closely tied to consumer demand and the extent to which operators can absorb or manage ongoing cost inflation. For haulage and logistics, resilience will depend heavily on contract quality, utilisation, cost control and the strength of customer relationships.
Across all of these sectors, one point remains constant: early intervention matters. Businesses that forecast carefully, maintain clear visibility over cashflow and seek advice before problems become critical will give themselves the best chance of protecting value, preserving options and avoiding more serious outcomes.
For further information visit PKF Littlejohn Advisory UK LLP [2]