A record 4,287 UK construction companies entered insolvency in the year to May 31 2024, according to new data from international audit, tax and advisory firm Forvis Mazars.
Construction companies accounted for more than 17% of all insolvencies in the UK and Wales in the past 12 months – the highest of any industry sector.
Decreased demand from developers and build cost inflation is rippling through the supply chain causing contractors and subcontractors to become insolvent.
Many smaller sub-contractors report their invoices are being paid progressively later, forcing some into insolvency.
Rebecca Dacre, partner at Forvis Mazars, said: “Seventeen construction companies are now going insolvent every working day. This is an extremely tough period for the industry. Contractors have traditionally had to operate on very thin margins, even when the economy is booming.
“When the economy struggles, it’s often construction companies that get hit the hardest. That’s what has happened over the past year. Borrowing costs are beginning to fall significantly but need to come down more for this sector to recover.”
