Construction Insolvencies Show ‘Tentative’ Signs of Stabilising

Construction firms accounted for 16.9% of all insolvencies in England and Wales in February 2026, with 301 registered construction businesses becoming insolvent.

This was 24 more than was recorded in January 2026 and was 66 fewer than the 367 recorded in February 2025, according to the latest data from The Insolvency Service.

By rough comparison, construction firms accounted for 14% of all registered businesses in the UK as of September 2025.

The largest proportion of construction insolvencies were among firms providing specialised construction activities with 157 recorded in February – 29 fewer than those recorded in January.

“Construction insolvencies are showing tentative signs of stabilising, with annual totals easing slightly. That said, the sector remains disproportionately exposed,” comments Dr David Crosthwaite, Chief Economist at BCIS.

“While the worst of the post-pandemic cost shock has passed, pressures have not disappeared. Ongoing geopolitical tensions, including instability in the Middle East, continue to create uncertainty around energy and materials costs, while subdued construction output and weak project pipelines are weighing on cash flow.

“In this environment, insolvency risk remains elevated and firms will need to remain vigilant on cost control, contract terms and financial resilience as conditions evolve.”

Year-on-Year

The total number of construction firms becoming insolvent in the 12 months to the end of February 2026 was 3,851. This was a 4.9% decrease on the 4,050 insolvencies recorded in the year ending in February 2025 and a 19.6% increase on the 3,221 in pre-pandemic 2019.

Of all cases where the industry was captured in the statistics, construction experienced the highest number of insolvencies in the year to February 2026.

The Insolvency Service said while the insolvency rate has increased since the lows seen in 2020 and 2021, it remains much lower than the peak of 113.1 per 10,000 companies seen during the 2008-09 recession. This is because the number of companies on the effective register has more than doubled over this period. The rate in the year to the end of March 2026 was 51.6 per 10,000 companies.

Scotland Insolvencies

In Scotland, there were 24 construction company insolvencies in March 2026, 12 more than in February 2026, accounting for 18.3% of all insolvencies in the country.

This took the total number of construction insolvencies in Q1 2026 to 44, four higher than the previous quarter’s total and the same as in Q1 2025.

The number of Scottish construction insolvencies for the 12-month period to March 2026 was 191. This was a 1.6% decrease on the 194 recorded in the year to March 2025 and a 7.8% decrease on the 207 in pre-pandemic 2019.

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