Construction insolvencies stay stubbornly high

Construction remains the sector with the highest number of business collapses, according to the latest monthly figures from the Insolvency Service.

There were 3,912 construction firm insolvencies in the 12 months to January 2026, representing 17 per cent of all the cases analysed.

This was followed by wholesale and retail (16 per cent) and the accommodation and food service activities sector (14 per cent).

In January alone there were 277 construction business insolvencies, marking a 2 per cent increase from December but 9 per cent less than in January 2025.

The latest data is consistent with full-year 2025 data, which revealed that construction companies made up 17 per cent of all business collapses – the largest share of any sector for the fourth year in a row.

Meanwhile, the latest available rolling annual figures to October 2025 showed that individual insolvencies in the construction sector were down by 28 per cent on a year-by-year basis.

But construction was still the biggest single sector, accounting for 267 individual insolvencies or 23 per cent of the total.

There were around 748,000 self-employed construction workers in December 2025, accounting for 37 per cent of the sector’s total workforce, according to the Office for National Statistics.

Karl Horton, data services director at the Building Cost Information Service, said the latest monthly figures marked the lowest January number of construction business insolvencies since 2023.

“However, recent volatility means there is no room for complacency,” he said.

“Current geopolitical uncertainty also poses risks to input costs, project viability and new starts, with the potential to push insolvencies higher again if instability persist.”

Mark Supperstone, partner at accountancy firm S&W, agreed that external geopolitical pressures are continuing to impact the industry.

“The onset of the Iran War introduces a new layer of instability for a sector already under strain,” he said.

“As an energy-intensive industry, any volatility in global oil markets is felt acutely [in construction]. We are likely to see upward pressure on material prices, alongside increased risk of disputes linked to delays, extensions and contract performance.”

Supperstone said he expects shipping costs to rise, adding: “Although much of the UK’s finished construction products are sourced from Europe or the US, the conflict will likely affect shipping routes for raw materials, creating knock-on disruption and uncertainty.”

He also referred to regulatory and compliance pressures on construction firms, after the Building Safety Regulator became an independent statutory body on 27 January.

This means that businesses are adjusting to new systems for building control, competence standards and product regulation, Supperstone said. “For many companies, this adds further operational complexity at a time when resources are stretched,” he said.

In the current environment, Horton added, transparent communication between clients and contractors, fair risk allocation and robust financial due diligence are “more critical than ever”.