Could 2026 be a turning point for struggling businesses? New analysis from the Resolution Foundation suggests that 2026 could bring sharper pressure on underperforming UK firms, particularly so-called “zombie” companies that have been surviving but not thriving. According to its latest outlook, many businesses are facing what it describes as a “triple whammy”: Prolonged high interest rates Elevated energy costs Successive increases to the minimum wage For firms that were already operating on tight margins, this combination may prove decisive. What are “zombie” firms? Economists use the term “zombie firms” to describe businesses that generate just enough cash to survive but not enough to grow, invest or meaningfully reduce debt. Persistently low interest rates after the 2008 financial crisis allowed many heavily indebted businesses to continue trading despite weak performance. Cheap borrowing reduced immediate pressure, but it also meant labour and capital remained tied up in less productive areas of the economy. Now, with operating costs higher and borrowing no longer ultra-cheap, that cushion has largely disappeared. Productivity and disruption The report suggests that 2026 could mark a turning point for the UK economy after decades of weak productivity growth. Productivity (output per hour worked) matters because it drives wages and living standards. Higher productivity allows businesses to pay more without simply passing on costs. However, the Foundation cautions that any productivity improvement may come with short-term disruption. If weaker firms exit the market, unemployment may rise before the benefits of reallocation are felt elsewhere. Unemployment already rising UK unemployment is already at its highest level outside the Covid period for a decade. The headline rate reached 5.1% in October , with many employers delaying hiring decisions ahead of Rachel Reeves’s Autumn Budget. Business groups argue that higher taxes and rising wage costs are discouraging recruitment, particularly among SMEs. Interest rates and operating costs Although the Bank of England has cut base rates six times since August 2023, businesses are still operating in a cost environment well above pre-pandemic levels. Those rate cuts followed 14 consecutive increases, and the cumulative effect continues to be felt in loan servicing and financing costs. Add energy costs and wage pressures into the mix, and it’s clear why some firms are struggling. Confidence remains fragile Separate research from the British Chambers of Commerce reinforces the picture. At the end of 2025, business confidence fell to a three-year low. Tax and inflation were cited as the most significant concerns. Fewer than half of firms expect turnover to rise in the year ahead, and investment plans are being scaled back rather than expanded. That combination of cautious hiring, lower investment and rising costs, creates a more fragile economic backdrop heading into 2026. What this means in practice Headlines about “zombie firms” can sound dramatic, but the practical question for most business owners is simpler: Are margins under pressure? Is debt affordable at current rates? Can costs be absorbed without damaging cashflow? Is investment still realistic this year? In tighter conditions, clarity becomes more valuable than optimism. Understanding your cost base, reviewing borrowing, and forecasting realistically for the next 12 months often makes the difference between reacting late and adjusting early. If you’re unsure how exposed your business might be to these pressures, it’s worth reviewing the numbers before they review you. If you’d like to talk through your position and options for 2026, we can do exactly that.

What directors need to do Companies House has started rolling out mandatory identity checks for directors and people with significant control (PSCs). This forms part of the wider reform programme under the Economic Crime and Corporate Transparency Act 2023 , designed to improve the reliability of the public register and reduce misuse of UK companies. If you’re a director, PSC, or act for multiple companies, this isn’t something to ignore. The process isn’t complicated, but there are a few moving parts and deadlines to manage. This guide explains: Who needs to verify How the process works What you need to do for each role What happens if you miss a due date What’s changing - and why it matters Historically, Companies House accepted filings largely on trust, with limited verification at the point of submission. That’s changed. Under the reforms, Companies House now has stronger powers to: Query and reject information Remove false or misleading content Act as a more active gatekeeper of the register In its 2024–2025 annual report , Companies House confirmed it used new powers to remove suspicious information and combat registered office abuse, impacting over 100,000 companies , including striking some off where necessary. Identity verification is one of the key elements of this reform. The aim is straightforward: make it harder for individuals to set up companies, act as directors or declare control using false identities. Key dates and the transition period Identity verification became a legal requirement from 18 November 2025 . Companies House describes this as the start of a 12-month transition period , giving companies time to ensure directors and PSCs: Verify their identity Connect that verified identity to each role they hold There isn’t a single universal deadline. Your due date depends on: Your role Your company’s confirmation statement cycle Companies House will: Display due dates on the public register (on the people tab) Email companies ahead of confirmation statement deadlines explaining what must be done If you act for multiple companies, assume you’ll be managing multiple deadlines. Who needs to verify? You must verify your identity if you are: A company director The equivalent of a director (LLP member, general partner, managing officer) A director of an overseas company registered in the UK A person with significant control (PSC) An authorised corporate service provider (ACSP) Companies House has also confirmed verification will later extend to additional filing roles, limited partnerships, corporate directors, corporate LLP members and officers of corporate PSCs. The two-step process (often missed) There are two separate steps : Complete identity verification and receive a Companies House personal code Provide an identity verification statement (including your personal code) for each relevant role Verifying once does not automatically connect you to every role. You must use your personal code to link your verified identity correctly. Ways to verify 1. Online via gov.uk One Login (free) This is the free route. Depending on your circumstances, you may verify by: Using the ID checking app Answering online security questions Entering photo ID details and attending a participating Post Office Government testing reported: An average completion time of 2.4 minutes (18 March–30 June 2025) 60% awareness of the new rules (YouGov sample of 1,007 senior decision-makers) 81% support for verification 73% agreeing directors/PSCs would find it easy 2. Via an ACSP (may charge a fee) An ACSP is an AML-supervised professional (e.g., accountant, solicitor, formation agent) authorised to verify identities. They must verify to the same standard as Companies House. They may charge a fee. This can be practical if: You’re overseas You cannot use the online route You already use an agent for filings Your Companies House personal code Once verified, you receive an 11-character Companies House personal code . Important points: You generally verify once (unless instructed otherwise) The code is personal to you, not linked to one company You must use it when filing confirmation statements, being appointed as a director or becoming a PSC Keep it secure and only share it with trusted filing agents If verified via an ACSP, the code will be emailed to you. Treat it like a secure credential. What directors must do — step by step Step 1: Identify your roles List: Each company where you are a director Equivalent roles (LLP member etc.) Whether you are also a PSC Any overseas entity roles You must connect your verified identity to each role correctly. Step 2: Complete verification Either online or via an ACSP. Step 3: Store your personal code securely Good practice includes: Using a secure password manager Restricting access to authorised filers Keeping a record of when it’s shared Step 4: Connect your identity to each role This is where most of the transition work happens. Directors You must provide your personal code within the company’s next confirmation statement . If directors are not verified, Companies House has stated it will reject the filing. If you’re a director of multiple companies, this applies to each one. PSCs Rules differ slightly: If you are both a director and PSC: Provide the code in the confirmation statement (director role) Also provide it separately via the PSC verification details service within a 14-day window starting the day after the confirmation statement date If you are a PSC but not a director: Provide your personal code within the first 14 days of your birth month If you became a PSC after 18 November 2025: Provide the code when first added or within 14 days Companies House allows you to check your specific 14-day window on the register. New companies and appointments When registering a new company, personal codes must be provided for directors at the point of filing. Early verification makes incorporations smoother. For overseas companies, directors must verify by the anniversary of the UK establishment’s registration. What happens if you don’t comply? Companies House has been clear. Acting as a director without verification is unlawful Companies may also commit an offence PSCs who fail to verify may commit an offence Enforcement routes include: Prosecution Referral to the Insolvency Service Financial penalties Filing rejections Companies House has stated it will reject confirmation statements if directors are not verified. Extensions for PSCs are limited (up to 14 days in certain circumstances). If you anticipate missing a deadline, treat it as urgent. Privacy and security Companies House states: Do not email or post ID documents Use approved verification routes only Keep your personal code secure Since April (as referenced in the November 2025 update), over one million people have verified their identity via gov.uk One Login. Verification makes impersonation harder — but you should still protect your credentials. A practical checklist Personal Confirm all roles Complete verification Store your personal code securely Identify confirmation statement dates Identify PSC 14-day windows Company Confirm all directors have verified Ensure filing agents have required codes securely Check register for status indicators Verify early for upcoming incorporations Final thoughts If you only do three things: Verify your identity Store your personal code securely Provide the code in the right place for each role  If you manage several companies, treat this as a small compliance project and track it properly. If you’re unsure how this applies to your roles, or you want help coordinating deadlines across multiple companies, I can help make it manageable.