The construction industry was the worst hit sector for insolvencies over the past year, newly released official figures show.
Data from the Insolvency Service show insolvencies in the sector reached their highest level for seven months in February.
There were 367 insolvencies in the month, the highest number since June 2024, when there were 400.
Figures previously revealed by Construction News showed a sharp spike in administrations during February, with the likes of Acheson Construction and JS Wright & Co going under.
The Insolvency Service data include administrations but also cover forms of insolvency such as liquidation and receivership.
The government body revealed construction was the worst-hit sector for insolvencies in the year to March 2025, with 4,046 cases, or 17 per cent of all cases where the company’s industry was known.
The wholesale and retail trade was the second worst hit, with 3,607 cases.
Mark Supperstone, partner at accountants S&W, said he did not expect the picture to improve quickly.
“Economic uncertainty in the UK and globally, in the wake of the Autumn Budget and changes around US tariffs on raw materials, is also a significant concern for the sector and already impacting planning and project timelines,” he said.
“There are many indications that the industry’s woes are not going to disappear any time soon.”
Kelly Boorman, national head of construction at accountants RSM UK, said inflation, tariffs and rises to employment costs create “the perfect storm” for the construction industry.
“Interest rates remain high for many construction businesses, continuing to increase the debt burden, meaning any fall in activity has a significant impact on profits. Although many legacy contracts have completed, there’s still plenty of projects that have been shelved or delayed, causing a ripple effect of pressure throughout the supply chain,” she added.
However, Boorman said there is reason for cautious optimism in the longer term.
“While volumes of work take a short-term hit, pipelines are looking better due to contractors being more selective over the projects they tender for,” she said.
“This shift in power to contractors is driving activity and creating a more sustainable environment for businesses to win work, negotiate better terms and maintain profit margins.”
The 4,046 insolvencies in the industry in the year to March 2025 was down from 4,424 in the year to March 2024.
Aecom managing director for building and places Jo Streeten said: “Falling insolvency levels is welcome news following a challenging start to the year.
“Contractors will take heart from the construction sector’s recent return to growth, with order books edging closer to capacity. However, margins remain tight and, from this month onwards, firms will be contending with the uplift in [National Insurance contributions] landing on their balance sheets.
“The focus for the time being therefore continues to be careful cost and risk management, with further interest rate cuts and the government’s 10-year infrastructure strategy expected to breed greater confidence in the market down the line.”