Pressure mounts for construction industry as insolvencies rise
In July 2025, the number of registered company insolvencies in England and Wales was 2,081, similar to both June 2025 (2,053) and July 2024 (2,078).
The construction industry experienced the highest number of insolvencies in the 12 months to June 2025 at 3,984, making up 17% of all industry cases.
Commenting on the latest construction insolvency statistics, Kelly Boorman, National Head of Construction at RSM UK, said: “The latest insolvency figures show that the construction industry continues to experience the highest number of insolvencies, despite the government’s focus on housebuilding and infrastructure. While it is positive to see interest rates coming down, which will ease the debt burden for many SME businesses and provide access to funding, enabling delivery of the enlarged pipelines, this also causes concern over the risk of overtrading. As construction activity ramps up, the risk of strain on the supply chain will likely grow. Businesses continue to grapple with rising costs, including inflationary pressures and higher National Insurance Contributions, without the flexibility to pass these costs on. As a result, the supply chain may tighten further, leaving businesses on the backfoot.
“In addition, as project volumes increase, main contractors will inevitably face greater costs as the pricing power moves back into the supply chain, with labour shortages stretching capacities. Many of these businesses will also lack the organisational structure and risk and financial management needed to support fast-paced growth and rising demand, which could contribute to future insolvency spikes. We could therefore see an uptick in M&A activity, as businesses look to absorb parts of the construction supply chain to secure labour and materials and ensure supply continuity. However, this could lead to workforce migration and more instability for smaller businesses due to a squeeze on labour and rising wage pressures.”
She added: “There has been some speculation this week about introducing a four-day working week in construction to attract new talent and improve productivity, but given ongoing constraints, it remains more of a pipe dream than a practical solution. This reinforces the importance of the construction industry forming strategic partnerships to support the funding and adoption of new technologies to drive efficiency and reduce the risk of insolvency.”