The building materials supply chain is facing a combination of falling sales and reported reductions in trade credit insurance, according to the Builders Merchants Federation (BMF).

The trade body said reported cuts of up to 70% in trade credit insurance for suppliers to one of the UK’s largest housebuilders are adding pressure to a sector that has experienced four consecutive years of decline.

Early figures from the BMF’s Builders Merchant Building Index (BMBI), due to be published next week, indicate that volume sales in June fell by 10% compared with June 2025.

The figures follow a reported 10.5% year-on-year decline in volume sales in May.

Building materials sales continue to decline

BMF members have described current trading conditions as worse than those experienced during the 2008 financial crisis.

John Newcomb, CEO at the BMF, said: “The recent significant drop in sales for both May and June, combined with reported cuts to Trade Credit Insurance are of great concern.

“The insurance is a vital backstop that protects jobs and enables the building materials supply chain to trade with confidence.”

He warned that reductions in insurance cover could affect businesses across the construction supply chain.

“To jeopardise that would be a step backwards that could further undermine confidence in the construction supply chain, put jobs at risk and impact the ability of UK firms to export to other countries.”

The BMF said the current downturn differs from the disruption experienced during the Covid-19 pandemic, when the initial shock was followed by a recovery.

Newcomb said:“Earlier this year, some of our members said that trading conditions in building materials were on a par with the fallout from the market crash of 2008 across the UK.

“The situation has evolved and we now have the majority of BMF members agreeing that trading conditions in mid-2026 are far worse than they were during that global financial crisis of 2008.

“It’s even worse than Covid, because although that had a massive impact on the industry, the shock was short and sharp, with a strong recovery.

“We are now in a four year decline, which has proven to be deep and long.

“The latest BMBI figures reflect the lack of confidence in the market and provide a clear illustration of the gravity of the situation.”

BMF calls for measures to support construction demand

The BMF has previously warned that policy, taxation and regulatory pressures are contributing to weaker demand across the construction supply chain.

The organisation is calling for measures to support housebuilding and stimulate demand in the housing market, including incentives for first-time buyers.

Newcomb added: “There are currently no green shoots on the horizon and the outlook remains extremely challenging with no change in the current situation anticipated.

“We need action now, with incentives including help for first time buyers to stimulate the housing market.

“Construction does the heavy lifting in the UK economy, but it seems that there’s a constant barrage of obstacles in the UK which are eroding its position.”

The BMF represents more than 1,020 merchant, supplier and service companies, with combined sales of around £52bn and almost 209,000 employees.