More construction firms went under in March than in any other month since last July, newly released official figures show.
Data published this morning (20 May) by the Insolvency Service shows 377 construction firms went under in March, up on the 368 total for February (revised from the previously reported figure of 367).
Exactly 400 construction insolvencies were recorded in July 2024.
The data includes administrations but also covers forms of insolvency such as liquidation and receivership.
Construction was the worst-hit industry for insolvencies in March, as was the case in February and December 2024.
The next worst-affected trade in the latest figures was the retail of motor vehicles and motorcycles, with 315 businesses going under.
Most of the 203 construction firms that collapsed in March were specialist subcontractors, according to the Insolvency Service.
A total of 87 specialists were categorised as electrical, plumbing and installation contractors, while a further 71 were in the building completion and finishing category.
RSM UK restructuring advisory partner James Hawksworth said “a combination of factors”, including the skills shortage, regulatory pressures and the impact of US tariffs on supply chain certainty, was causing volatility in the sector.
He warned that the industry had also yet to see the impact of increases to the minimum wage and employers’ National Insurance contributions (NIC), which came into effect in April.
“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,” Hawksworth said.
“As these larger firms manage the impact on their cashflow, 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.”
Despite the gloomy figures for March, notably fewer construction firms went under in the year to March 2025 than the preceding 12-month period.
Jo Streeten, consultancy Aecom’s managing director for building and places, said this “suggests we’re looking at more stable trading conditions”.
Rolling annual figures from the Insolvency Service showed that 4,111 firms went under in the 12 months to March 2025, lower than the 4,274 total for the year to March 2024. But in both cases, construction accounted for 17 per cent of insolvencies across the UK.
Streeten said: “Order books are already beginning to fill up for 2026, and the government’s ambition to deliver new infrastructure and housing is providing a clear direction of travel.”
She added that the Bank of England’s decision on 8 May to cut interest rates to 4.25 per cent had “further strengthened business confidence, easing pressure on financing and creating a more favourable environment for investment”.
Meanwhile, the government’s upcoming Spending Review, which is expected to conclude on 11 June, is “expected to provide long-term clarity over the major investment decisions that must be made to deliver the infrastructure we desperately need”.
“However, it will require the private sector’s support to get large-scale projects moving at pace, particularly where additional capital and risk appetite are required to unlock complex schemes,” Streeten said.
The construction sector has been struggling this year to stave off insolvencies.
And in March, professional services firm Turner and Townsend warned that increases to the minimum wage and employers’ National Insurance contributions could force more construction companies out of business.