What trade credit claims trends tell us about key UK sectors

Trade credit insurance claims data can provide vital insights into the state of business sectors and the wider economy, reflecting stress in business transactions.

In this article, we delve into our latest claims data to see which business sectors are under growing strain – and which are on the mend. 

Construction

Claims for trade credit insurance in the construction sector have fallen on both an annual basis (down 16%) and in August 2025 (down 28%). 

This is despite a sustained downturn in the sector – construction activity slowed for the eighth month in a row in August, in the longest downturn since 2020.

While market conditions remain challenging – and a further squeeze of public spending is likely in the Autumn Budget – there is increased optimism that the sector's credit risk situation will improve in the next 12 months.

Consumer durables 

The summer was kind to retailers, with retail sales growing 3.1%  year-on-year in August, helped by record warm weather and the Bank of England’s interest rate cut.

Home appliances, furniture accessories, DIY and garden goods all saw sales growth in August, according to research from the British Retail Consortium (BRC). 

This improvement in retailer fortunes was reflected in a fall in credit insurance claims too. Claims from consumer durables companies – spanning sub-sectors including retail, wholesale and furniture – fell 21% in August. Over 12 months, they are down 26%.

Food 

Food retail proved a particular bright spot over the summer, with sales up 4.7% year-on-year in August, according to the BRC. This sales growth coincided with a 19% monthly fall in credit insurance claims (year-on-year, there is no change).

However, amid weak consumer confidence and slowing wage growth, it is likely that food sales in the UK will stagnate in 2025 and contract by 1.6% next year. 

Engineering 

Engineering firms continue to face significant challenges around hiring skilled members of staff and overcoming tough global competition. Also, as the sector is highly reliant on cross-border supply chains, it is highly sensitive to changes in global trade policies and US tariff increases.

Mechanical engineering output in the EU and the UK combined is likely to decrease again in 2025, followed by zero growth in 2026.

However, this marks an improvement on a particularly tough 2024, when output fell 5.3%. Against this backdrop, claims for the past 12 months are down 22%, and fell particularly sharply in August (-42%).

Services 

Activity in the UK’s services sector, as measured by the S&P Global UK services PMI survey, rose to a 16-month high  in August as businesses enjoyed bigger workloads and rising sales at home and overseas.

Claims for trade credit insurance fell in the month as well, down 23%. Within services, hotel and catering claims fell 29% in August. However, they remain 25% higher year-on-year, as businesses have been hurt by rising costs and weak consumer spending.

Transport 

In August, claims for trade credit insurance in the transport sector fell 38% to their lowest level since December 2023.

However, challenges, including ongoing staff shortages, are holding back activity and growth in the sector. 
 
In the haulage subsector, rising wages, vehicle replacement expenses, and potential fuel price increases continue to squeeze margins. 
 

Electronics

The European and UK electronics/ICT sector continues to underperform overseas competition. After a 1.1% contraction in 2024, production of electronics and computers in the UK is likely to grow by just 1.6% in 2025 and 1.4% in 2026. Overall demand momentum will remain modest, reflecting the slow industrial recovery. 

This weak performance has been mirrored in rising trade credit insurance claims. Over the past year, claims made by companies in the sector have increased by 50%, although there was no change in August.

Metals

UK basic metals production is expected to shrink by over 9% annually in 2025 and 2026, driven by Tata Steel’s blast furnace closures and delays in electric arc furnace projects. 

Despite a US trade deal easing some tariffs, a 10% blanket duty and the risk of cheaper imports continue to pressure prices. 

High debt levels – linked to pandemic borrowing, leveraged buy-outs, and employee ownership transitions – are straining firms as lenders remain slow to pass on lower interest rates. 

Insolvencies, particularly in fabricated metals, exceeded historic levels in 2024 and are set to remain high.

These persistent financial pressures are showing up in claims data. Trade credit insurance claims in metals rose 7% year-on-year to August.

Overall, the latest trade credit claims data reflects a patchwork recovery among UK businesses, with some sectors starting to stabilise while others continue to face deep financial strain.