The number of construction companies in England and Wales filing for insolvency in 2024 was 4,032, an 8% decrease from the 2023 total of 4,388.
The number of registered company insolvencies for the construction industry in December 2024 was 291, down 8% from November 2024 (319) and down 20% from December 2023.
Mark Supperstone, partner at financial services consultant, said: “The latest ONS insolvency figures for January 2025 show an overall rise in insolvencies across England and Wales. However, digging into the sector statistics, insolvencies in construction are down at 291 compared to 319 in the previous month (November 2024). This decrease is interesting in light of the recent S&P Global UK Construction PMI report which showed overall construction activity was down sharply in January. The particularly acute decline in house-building for the fourth consecutive month, coupled with the downturn in commercial construction, paints a concerning picture, despite the lower insolvency numbers for December. The situation may become clearer next month when the construction insolvency figures are released for January, however it is unlikely that the industry is out of the woods yet.”
He continued: “Client hesitancy due to economic uncertainty is translating into delayed projects and a lack of new work, which may ultimately push vulnerable businesses towards insolvency. The sustained, steep rise in input costs since April 2023, driven by energy, transportation, and labour, further exacerbates the pressure on margins, leaving many firms with little room to manoeuvre.
“The more streamlined planning process under housing secretary Angela Rayner, as well as positive indicators in the housing market, such as increased buyer demand and an increase in mortgage applications (49% higher than Jan 2024) may offer a glimmer of hope for the future. If these trends continue, we could see a positive impact on housebuilding activity by late-2025, which would have a ripple effect, benefiting related sectors like groundworks and RMI/DIY specialists. This potential upturn could offer a lifeline to some construction firms currently struggling, but the next few months will be crucial. Businesses need to carefully manage their cash flow, engage proactively with creditors and seek expert advice early to navigate these challenging times and position themselves for recovery when the market picks up.”
Also offering comment was Aecom managing director (building & places) Jo Streeten, who said: “Another month of easing in insolvencies is a positive sign for the industry which continues to face tough trading conditions – particularly in the wake of falling output growth at the start of the year.
“While cost pressures have slowly eased, low margins are still posing a risk with the full impact of the autumn budget now clearly being felt across the sector as firms work hard to steady the balance sheets.
“Despite the anaemic performance of the wider economy, interest rates are falling, which will help boost order books, and firms can be cautiously optimistic about the year ahead. It’s crucial that careful cost and risk management throughout the contract lifecycle, from pricing to delivery, remains a priority to bring positive growth and deliver on the government’s growth agenda.”
