The rate at which construction firms are going bust has slowed, according to official figures.
Data from the Insolvency Service reveals that 4,303 firms went under in the year to July – the lowest rolling annual total since 2020.
Construction still accounted for 16.9 per cent of all insolvencies in England and Wales in July – a month in which the total of 397 insolvency registrations was the largest of any sector.
Scotland saw 24 construction firms register for insolvency last month, five more than in July 2023. Northern Ireland accounted for 20 firms but no sector breakdown was available.
The Building Cost Information Service said continued high interest rates and the “delivery of legacy projects” were factors in the latest figures for construction. The Bank of England did not implement a base rate cut until 1 August.
There are signs of macroeconomic improvement in the data. The Insolvency Service figures reveal that 7 per cent fewer businesses in all industries collapsed in July compared with June (2,363). However, the latest monthly figure is 16 per cent higher than July 2023 (1,890 firms).
Allan Wilen, economics director at data intelligence provider Glenigan, said the stabilisation in construction insolvencies was a positive step after they rose by 4 per cent in 2023.
But he warned: “A potential strengthening in industry activity during the second half of this year and during 2025 may increase insolvency risks as the rise in workload increases the call on firms’ cashflow.
“A diversified client base will reduce exposure to any one client with a pipeline spread more evenly over a larger number of customers. This can help reduce the threat from any financial crisis or adverse change of payment terms by any one firm.”
