New business creation declines in the EU as bankruptcies rise

Tuesday 18 August 2026 - 20:25

By: Azzat Manal

New business creation declines in the EU as bankruptcies rise

Business activity across the European Union weakened during the second quarter of 2026, with the number of newly registered companies declining while corporate bankruptcies increased, according to the latest data from Eurostat.

The number of new business registrations fell by 0.5% compared with the previous quarter, pointing to a more cautious environment for entrepreneurs and investors. At the same time, company bankruptcies increased by 5.7%, highlighting continued pressure on businesses across several parts of the European economy.

New business registrations declined in five of the eight economic sectors covered by the data. Manufacturing recorded the sharpest contraction, with registrations falling by 3.6%. The accommodation and food services sector followed with a 3.4% decline, while education and social activities recorded a 3.2% decrease.

The trend was more positive in information and communication, where new business registrations jumped by 8.8%. Construction also recorded growth, with registrations increasing by 1.0%. Financial services remained broadly unchanged during the quarter.

The increase in bankruptcies was particularly pronounced in several service-related sectors. Education and social activities recorded the largest rise, with bankruptcies increasing by 21.1%. Transport followed with an 11.4% increase, while financial services registered a 6.8% rise.

However, some sectors experienced fewer insolvencies. Bankruptcies declined by 2.6% in accommodation and food services, while construction recorded a 1.7% decrease. Retail trade also saw a modest reduction of 1.2%.

The contrasting figures underline the uneven nature of economic conditions across the European Union. While some technology-related and construction activities continued to attract new businesses, other sectors faced declining entrepreneurship and a growing number of company failures.

The rise in bankruptcies could also reflect the cumulative impact of higher operating costs, financing conditions and weak demand on businesses that have struggled to maintain profitability. The situation varies considerably between sectors and individual member states, making the overall figures an important indicator of the changing business environment rather than a uniform measure of economic weakness.

The second-quarter data will therefore be closely watched by policymakers and businesses as the European economy navigates changing investment conditions and sector-specific challenges.