According to its latest ‘UK Market Intelligence Report’ (UKMI), the construction industry has suffered more company failures than any other sector, with a 72.1% rise in insolvencies year-on-year to Q2 2022.

During the year to Q2 2022, 3,850 construction firms across England, Scotland and Wales became insolvent — accounting for almost one-fifth of all company insolvencies.

With the government’s Covid support measures — including furlough and temporary insolvency protections — now withdrawn, firms that were at risk of insolvency before the pandemic are increasingly more exposed.

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With almost all construction firms classified as SMEs — many of which have been accruing an increased amount of debt — the industry will likely have a high number of overly leveraged contractors particularly at risk of insolvency.

Martin Sudweeks, UK managing director of cost management at Turner & Townsend, said: “Businesses need to be more alert to insolvency risk across their supply chains as the long-term impact of the pandemic begins to sink in and the fiscal crutches offered by government are removed.

“It’s essential to spot the tell-tale signs of insolvency risk early — those include low productivity, difficulty securing labour or materials, and failure to pay suppliers.

“To be prepared, build trust and open communication within your supply chain.”