UK construction leads industry insolvencies despite sector decline

The UK construction sector continues to record the highest number of company insolvencies compared to any other industry. According to figures from The Insolvency Service, there were 3,841 construction insolvencies in the 12 months leading to July 2026, representing 17% of all identified industry cases. Despite this high volume, the total number of insolvencies in the sector has declined compared to the previous 12-month period.

Financial experts note that while failures are decreasing, the sector remains under significant pressure. Factors such as fixed-price contracts, rising labor and material costs, and unattractive payment terms contribute to the vulnerability of smaller businesses.

Beyond insolvency rates, broader economic data indicates a decline in business growth and confidence. The number of UK scale-up businesses has fallen for the second consecutive year, and new business registrations dropped by 6% in the second quarter of 2026 compared to the previous year. These trends suggest an environment where entrepreneurs are becoming increasingly cautious about expansion and new ventures.