Construction still accounts for more insolvencies than any other sector

Construction is still the sector with the highest number of company insolvencies over the past 12 months despite improving economic conditions, according to the latest official figures.

Nearly one in five insolvencies over the past year were in the construction industry, which saw 4,403 firms go bust, 18% of the UK total.

Aecom managing director Jo Steeten said the figures were evidence that construction was still under pressure despite easing of inflation rates and material delays.

“Spring has brought with it renewed optimism and an easing in insolvencies compared to this time last year. However, the reality is that pallid economic conditions – particularly high interest rates – continue to sap demand for new work and put pressure on contractor balance sheets,” she said.

“And, while there is evidence that chronic materials inflation has broadly receded, sustained wage growth remains a threat to margins despite firms having adjusted their pricing models.

“With the upcoming election likely to further stymie activity, construction is regrettably likely to be a leading contributor any future corporate insolvencies for some time yet. 

“To avoid any domino scenarios, it’s critical that supply chains continue to be transparent in their capacity to deliver work, and that the industry maintains its commitment to fair payment terms between contractors and sub-contractors.

The next closest sectors were firms working in  motor vehicles and motorcycle repair, which saw 3,941 insolvencies, and accommodation and food service activities, which saw 3,822 companies go under.

The latest insolvency figures come amid easing inflation rates, with 1,815 firms across all sectors going bust last month, 17% lower than in February 2024 and 17% lower than the same month in the previous year.