Spike in construction insolvencies heralds ‘difficult winter’
Written by admin on December 19, 2025
Monthly construction insolvencies have surged, according to the latest official figures, leading one analyst to warn of a “difficult winter” for the sector.
Insolvency Service data, released on Friday (19 December), shows there were 360 business failures in October.
This figure marked a 24 per cent rise on September’s total of 291, and a 13 per cent increase compared with October 2024’s total of 320.
According to the latest monthly Insolvency Service data, 2,034 business failures were recorded in October across all industries.
Rolling annual data from the government agency also showed that construction accounted for 3,973 insolvencies in the 12 months to October 2025 – 17 per cent of the all-industry total and more than any other sector of the economy.
Second behind construction was the wholesale and retail trade in motor vehicles and motorcycles, with 3,768 collapses.
Accommodation and food service activities accounted for 3,423 insolvencies.
“UK construction firms are facing a difficult winter,” said Mark Supperstone, partner at accounting firm S&W.
“The sector is grappling with falling demand and rising costs and faces significant structural challenges which risks pushing more companies into distress in 2026.”
Supperstone cited the latest S&P Global construction PMI index of 39.4 as “the sharpest downturn in output in over five years, driven by weak new orders and mounting pressure from labour, energy and transport costs”.
He added: “The key for struggling firms will be payment discipline and cashflow resilience, particularly for specialist subcontractors exposed to fixed price contracts and elongated supply chains.
Supperstone said contractors may need to tighten their working capital controls “to preserve jobs and deliver projects through a potentially volatile start to 2026”.
Qarrar Somji, director at Birmingham-based law firm Witan Solicitors and a specialist in company restructuring and insolvency, said: “The construction industry is facing a deepening crisis, and it is not slowing down any time soon.”
He criticised the “flawed” payments system as one reason why so many construction firms face financial distress, adding: “While tougher regulations are needed to secure the financial health of the supply chain, in the short term, firms need to push for better contractual payment terms and put greater protections in place against early signs of failure.”
Somji also said last month’s Budget is adding to construction firms’ problems, especially with higher employment costs due to an increased legal minimum wage.
“We expect to see more companies needing restructuring or facing outright collapse,” he warned.
“In the coming months, firms will need to make difficult choices about hiring staff, increasing pay and repricing projects.”
