Construction firms accounted for 17% of all company insolvencies in England and Wales in July 2026, with 343 businesses entering insolvency during the month, according to figures from The Insolvency Service.
The latest total was 11 higher than the 332 construction insolvencies recorded in both June 2026 and July 2025.
Construction firms represented around 14% of all registered businesses in the UK as of September 2025, highlighting the sector’s continued exposure to financial distress.
Across the 12 months to July 2026, 3,841 construction businesses became insolvent. While this was 3% lower than the 3,976 recorded in the previous 12-month period, it remained 19% above the 3,221 recorded in the equivalent pre-pandemic period in 2019.
Specialist construction firms record highest number of insolvencies
Specialised construction activities accounted for the largest proportion of construction insolvencies in July, with 186 businesses affected.
The category covers a wide range of specialist contractors, many of which operate on a subcontract basis, including demolition and site preparation, electrical and plumbing installation, plastering, painting and glazing.
Across the 12 months to July, construction recorded the highest number of insolvencies of any industry sector.
The Insolvency Service said the insolvency rate has increased from the lows recorded in 2020 and 2021, although it remains below the peak reached during the 2008-09 recession.
The construction insolvency rate stood at 50.3 per 10,000 companies in the year to the end of July 2026, compared with a peak of 113.1 per 10,000 companies during the recession.
Energy volatility adds pressure on construction businesses
Dr David Crosthwaite, chief economist at BCIS, said construction insolvencies remained elevated as businesses continued to face cost and margin pressures.
“Monthly construction insolvencies remain elevated and crept up again in July, reaching their third highest level of the year to date. The risk of insolvencies remaining at these levels is significant, particularly given the sustained geopolitical uncertainty surrounding the US-Iran conflict.
“Oil prices rose again this week after the two-month window for negotiating a peace deal expired on Monday without a resolution. That adds another layer of uncertainty for construction businesses already operating under considerable cost and margin pressures.
“For now, businesses remain in a difficult holding pattern. Volatility in oil and energy markets will keeping feeding through into fuel, materials, transport and wider operating costs, while uncertainty makes it harder for firms to plan and price work with confidence.
“The situation is far from ideal for an industry where many businesses have limited capacity to absorb further cost increases. Until there is greater clarity over the geopolitical situation and the direction of energy prices, construction insolvencies are unlikely to recede substantially.”
Scottish construction insolvencies fall
In Scotland, 14 construction companies became insolvent in July 2026, nine fewer than in June. Construction accounted for 17% of all Scottish insolvencies during the month.
There were 185 Scottish construction insolvencies in the 12 months to July 2026, down from 194 in the previous year and 11% lower than the 207 recorded in the year to July 2019.
However, specialist construction activities remained the most affected category across Great Britain, although BCIS said the number of insolvencies was broadly proportionate to the category’s overall share of the construction sector.
Separate analysis of profit warnings issued by listed construction companies by EY-Parthenon indicates continued pressure on housebuilders.
Companies within the FTSE Household Goods and Home Construction sector, which includes housebuilders, issued six profit warnings during the second quarter of 2026, taking the total for the first half of the year to 10.
The warnings cited higher energy and input costs, weaker consumer confidence and reduced expectations of near-term interest rate cuts.
Measures being used to stimulate sales, including mortgage contributions, deposit support and part-exchange schemes, have also put pressure on profit margins.
BCIS said the construction sector’s exposure to financial difficulties is linked to several factors, including contract cycles and the cash flow challenges faced by contractors and subcontractors.
With costs remaining volatile, fluctuation clauses linked to work category and resource-specific inflation indices can be used to manage some of the risks associated with fixed-price contracts, while price adjustment indices can support budgeting, procurement and cash flow planning.
