More construction firms went bust than any other sector in March, as well as the 2025 year from April 2024 as a skills shortage, regulatory pressures and supply chain tariffs impacted on investor confidence.
Newly released figures show 377 firms in the construction industry collapsed in England and Wales in March – a figure that has increased 2.5 per cent from a revised 368 in February, and a sharp 23 per cent increase from January’s 306.
The latest data from the Insolvency Service shows insolvencies within the sector fluctuated over the year, with its highest of 403 in the previous 12 months in April 2024.
Of the 377 construction firms that went under in March, more than half (54 per cent) came from specialist subcontractors, with 203 companies folding.
It reached a seven-month high, increasing by 1.5 per cent on the previous month and included a total of 87 categorised as electrical, plumbing and installation contractors, with a further 71 in the building completion and finishing category.
The year saw the collapse of several firms, such as the UK’s sixth-biggest construction contractor at the time, ISG, and commercial and mixed-use new-build and refurbishment specialist, Blenheim House Construction.
James Hawksworth, restructuring advisory partner at RSM UK, said the volatile landscape was a result of a combination of factors, such as the skills shortage, regulatory pressures, and supply chain tariffs.
“With construction activity remaining in a prolonged period of contraction, the six months to March saw the highest number of winding up petitions in the sector for many years and it’s no surprise it continues to experience the highest number of insolvencies, above any other industry,” he said.
“However, construction has remained an incredibly resilient industry despite navigating regulatory, financial and workforce challenges in recent years.”
In the 12 months to month end March 2025 4,111 companies went under, accounting for 17 per cent of insolvencies nationally – the highest of any sector.
This was, however, a 4.3 per cent decrease on the 4,295 insolvencies recorded in the year to March 2024.
Wholesale and retail trade experienced the next highest insolvency rate of 15 per cent.
The UK government’s commitment to infrastructure investment and planning reform should help to return the sector to growth. However, Hawksworth warned that the impact of further cost pressures, following increases to employers’ National Insurance contributions and National Minimum Wage in April, was yet to be seen
“Larger players could be particularly squeezed, as with fewer subcontractors, they will have less flexibility to scale their workforce and will feel the brunt of the NIC and minimum wage impact.
“As these larger firms manage the impact on their cash flow, there will be an inevitable ripple effect through the sector, and this may be a tipping point for some businesses already struggling to manage tight margins and project delays.”
According to Giuseppe Parla, business recovery director at business advisory and accountancy, Menzies, UK businesses continue to walk a financial tightrope.
He said a reduction in the Bank of England’s base rate and an expectation of further cuts later in 2025 may bring insolvency numbers down, as more businesses will look to secure cheaper funding.
“Until there is greater stability across tax, trade and interest rate policy, we expect further volatility in insolvency trends – especially in sectors where margins remain tight and confidence is low,” said Parla.
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