Construction firms accounted for 16% of all insolvencies in England and Wales in May 2026, according to The Insolvency Service, with 281 registered construction businesses becoming insolvent.
This was 125 less than those recorded in April 2026 and 104 fewer than the 385 in May 2025.
By 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 169 recorded in May.
The total number of construction firms becoming insolvent in the 12 months to May 2026 was 3,803. This was a 6% decrease on the 4,063 insolvencies recorded in the year ending in May 2025 and an 18% increase on the 3,221 in pre-pandemic 2019.
Dr David Crosthwaite, chief economist at BCIS, said: “While insolvencies in May represented a marked improvement on April’s figures, risk levels remain elevated, particularly for smaller contractors and specialist subcontractors, which often bear the brunt of tighter margins and cash flow pressures during periods of weak demand and economic uncertainty.
“Even if peace arrangements between the US and Iran hold, the effects of prolonged disruption and higher energy, transport and materials costs are still filtering through global supply chains. This could lead to higher tender prices in the months ahead. However, subdued demand across the construction sector may force contractors to cut prices to secure work. Balancing profitability and competitiveness could prove particularly challenging in the second half of 2026.”
Across all industry sectors, construction experienced the highest number of insolvencies in the year to May 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 May 2026 was 50.9 per 10,000 companies.
In Scotland, there were 17 construction company insolvencies in May 2026, two fewer than in April 2026, accounting for 17% of all insolvencies in the country.
The number of Scottish construction insolvencies for the 12-month period to May 2026 was 185, 17 less than the 202 in the year to May 2025, and an 11% decrease on the 207 in pre-pandemic 2019.
Within the industry, firms classified as providing specialised construction activities are consistently the most affected across Great Britain. However, analysis shows that their numbers are proportional to their overall share within the construction sector.
This category includes companies providing a range of work, typically on a subcontract basis, from demolition and site preparation to electrical and plumbing installation, and finishing work like plastering, painting and glazing.
The Insolvency Service also publishes figures for Northern Ireland, but not with sector breakdowns.
The latest analysis of profit warnings issued by listed construction companies by EY-Parthenon suggests that, although the first quarter of 2026 was more promising, ongoing geopolitical uncertainty continues to pose a risk to the sector’s outlook.
FTSE Household Goods and Home Construction firms, which include housebuilders, issued four warnings in 1Q2026. EY-Parthenon’s report also revealed that five of the 12 warnings issued by the sector in the 12 months to 1Q2026 came from housebuilders.
Commentary pointed to extended sales cycles and limited forward visibility as key constraints with housebuilders expected to remain under pressure from high mortgage rates, weak sentiment and elevated build and financing costs.
A multitude of factors feed into company insolvency, though analysis of profit warning data by EY suggests the construction industry is particularly exposed to financial difficulty.
This is in part due to the nature of contract cycles and the challenges of cash flow management that contractors and subcontractors are subject to.
