Construction 'worst' sector for insolvencies

More than 600 construction firms went bust in the first quarter of 2013, according to data from consultant PwC.

The firm said it recorded 625 construction insolvencies in the first three months of the year, a reduction of 5% on the number recorded in the final quarter of 2012.

Despite the slight improvement PwC said that with 5,500 insolvencies recorded in construction in the last two years, the sector remained “among the worst affected out of all industry areas.”

PwC said that London remained the region with the highest number of construction insolvencies, recording 103 in the first quarter and 977 in the past two years. The North-east and North-west were the only regions to record an increase in insolvencies.

Of the 5,500 construction insolvencies for the last two years, 1,488 involved general construction or civil engineering firms and 378 involved architectural firms.

Jonathan Hook, PwC’s engineering and construction leader, welcomed the reduction in the number of insolvencies. However, he said: “The sector in the UK is still experiencing declining output year on year however, so we are not necessarily over the worst yet in terms of insolvencies. There is an ongoing cash squeeze throughout the supply chain as has been evidenced in recent reported results.

“The measures in the recent budget to support infrastructure, and in particular levels of house-building  are welcome but will take a little while to feed through into output.”