{"id":231471,"date":"2026-01-07T02:09:08","date_gmt":"2026-01-07T02:09:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/231471\/"},"modified":"2026-01-07T02:09:08","modified_gmt":"2026-01-07T02:09:08","slug":"businesses-warned-of-cashflow-contagion-as-more-firms-set-to-collapse-in-2026","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/231471\/","title":{"rendered":"Businesses warned of \u2018cashflow contagion\u2019 as more firms set to collapse in 2026"},"content":{"rendered":"

Businesses across the UK are being warned that more so-called \u201czombie\u201d companies could collapse in 2026, increasing unemployment and putting financially healthy firms at risk if they are left unpaid.<\/p>\n

Experts say rising costs, high interest rates and delayed payments are creating what has been described as a \u201ccashflow contagion\u201d, where the failure of one business can quickly spread to others.<\/p>\n

Zombie companies are typically defined as firms that are still trading but generate insufficient profits to cope with higher operating costs.<\/p>\n

A combination of elevated interest rates, expensive energy and rising minimum wages as key pressures facing weaker businesses, analysis from the Resolution Foundation highlights.<\/p>\n

The think tank said this environment could lead to a turning point where less productive firms fall away.<\/p>\n

It warned, however, that the short-term consequences are likely to include job losses and disruption.<\/p>\n

Unemployment stood at 5.1 per cent in October 2025.<\/a><\/p>\n

Business confidence has remained fragile, with many firms reluctant to recruit and cutting back on investment.<\/p>\n

Ruth Curtice, chief executive at the Resolution Foundation, told Newspage<\/a>: “There are early and encouraging signs of a mild zombie apocalypse, where higher interest rates and minimum wages have combined to kill off struggling firms and leave the door open for new, more productive ones to replace them.”<\/p>\n

She said: “But while this is good news for our medium-term economic prospects, the short-term impact could be job displacement and higher unemployment.”<\/p>\n

Ms Curtice said policymakers would need to intensify efforts to address the risks to workers.<\/p>\n

Small businesses say the warning signs are already visible in their finances.<\/p>\n

\"Businesswoman<\/p>\n

UK businesses are being warned that more \u201czombie\u201d firms could collapse in 2026, risking job losses and leaving healthy companies exposed to unpaid bills<\/p>\n

| <\/p>\n

GETTY<\/p>\n

Debbie Porter, managing director at Bakewell-based Destination Digital Marketing, said her company\u2019s aged debtor report shows a sharp deterioration in payment behaviour.<\/p>\n

She said: “My aged debtor report in my accounting software tells you all you need to know about the state of the economy right now.<\/p>\n

“Last financial year the average debtor days report was at 37 days, and this financial year it is 168 days, an increase of almost 350 per cent.”<\/p>\n

She said rising wage costs and associated employer contributions are placing additional strain on small firms.<\/p>\n

Ms Porter said increases linked to higher minimum wages, national insurance and pension contributions have added pressure that many businesses cannot absorb.<\/p>\n

“If the Government\u2019s strategy is to have a clear-out of zombie businesses, then that strategy is working.”<\/p>\n

\"Rachel<\/p>\n

The Government has been criticised for “clearing out businesses”<\/p>\n

| GB NEWS <\/p>\n

Kate Underwood, founder at Southampton-based Kate Underwood HR and Training, warned that struggling firms can destabilise otherwise viable businesses.<\/p>\n

She said: “Zombie firms won\u2019t just die quietly.”<\/p>\n

The delayed payments often escalate gradually before becoming critical, as businesses may continue supplying customers who are already in financial trouble.<\/p>\n

She warned that redundancy decisions made under pressure can expose firms to legal risk, and that businesses should closely monitor payment patterns among key customers and suppliers.<\/p>\n

Ms Underwood said tightening payment terms and acting early could reduce exposure to bad debt.<\/p>\n

Marc Smith, owner at Tamworth-based Smith & Ellis Butchers, said one of his two retail businesses is now operating in what he described as \u201czombie\u201d territory.<\/p>\n

He said rising costs have eroded profitability despite efforts to remain competitive.<\/p>\n

Mr Smith said: “What is pushing us towards the edge are energy bills that are simply too high.”<\/p>\n

He said wage growth, national insurance and pension contributions have risen faster than prices can be increased, and support with energy costs or national insurance relief could help small retailers survive.<\/p>\n

Without intervention, he said further closures are likely.<\/p>\n

Concerns have also been raised about how struggling businesses may turn to automation as a cost-saving measure.<\/p>\n

Colette Mason, author and AI consultant at London-based Clever Clogs AI, said poorly implemented automation could accelerate company failures.<\/p>\n

“Zombie companies will be finished off by desperate automation and the fines that follow.”<\/p>\n

\"Small<\/p>\n

Small business owners have been encouraged to be more strict on cashflow<\/p>\n

| GETTY<\/p>\n

Ms Mason warned that rushed adoption of artificial intelligence can lead to data protection breaches and regulatory action.<\/p>\n

Fines and enforcement action could finish off firms already under financial strain.<\/p>\n

Colin Crooks MBE, chief executive at Intentionality, said small businesses need to take a firmer stance on payments.<\/p>\n

He said: “Stop being polite about cashflow.”<\/p>\n

Mr Crooks said businesses should embed payment terms into contracts from the outset, and that deposits, progress payments and direct debits can reduce risk.<\/p>\n

Firms that allow extended payment terms without scrutiny are exposing themselves to unnecessary danger.<\/p>\n

“With more collapses forecast for 2026 and unemployment at 5.1 per cent, this isn’t paranoia, it’s survival.”<\/p>\n

He said businesses that protect their cashflow are more likely to withstand further economic shocks.<\/p>\n","protected":false},"excerpt":{"rendered":"Businesses across the UK are being warned that more so-called \u201czombie\u201d companies could collapse in 2026, increasing unemployment…\n","protected":false},"author":2,"featured_media":231472,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60,6189,1087,1650,1192],"class_list":["post-231471","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland","tag-labour-party","tag-money","tag-politics","tag-uk-politics"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/231471","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=231471"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/231471\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/231472"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=231471"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=231471"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=231471"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}