Construction insolvencies rose during July 2026, with the sector once again recording the highest rate of insolvencies during the month. While collapses remained below the peak seen earlier this year, the rate was pushed up by factors including the escalating conflict in the Middle East, rising costs, project delays, uncertainty over future demand and the shaky labour market.
According to Insolvency Service statistics, there were 343 insolvencies in the UK construction sector during July 2026. Despite being below the 2026 peak of 409 recorded in April, this was the second consecutive monthly increase, following 281 collapses in May and 309 in June.
The figure for July 2026 also represented a 3.3 per cent year-on-year increase from the 332 insolvencies recorded in July 2025. In the year to July 2026, the sector saw a total of 3,841 insolvencies, the highest number of any sector and representing 17 per cent of all insolvencies.
James Hawksworth, Restructuring Advisory partner at RSM UK said: “Today’s figures shine a light on the construction sector’s diminishing capacity for resilience against economic headwinds. As an energy intensive industry, continued conflict and uncertainty in the Middle East is proving a significant blow for many construction businesses, delaying investment and driving prolonged cost pressures amid an uncertain economic outlook.”
“With the number of winding up petitions issued across the sector in the first half of 2026 marking the second highest six-month period on record, these challenges will only exacerbate existing challenges, increasing the risk of a further rise in insolvencies.”
While there was a marginal year-on-year drop in the number of specialised construction activities insolvencies (from 194 in July 2025 to 186 in July 2026), this area of the market continued to account for more than half of insolvencies in the sector (54 per cent).
James Hawksworth commented: “Specialised construction activities comprise over half of all sector insolvency cases, with smaller and more specialised construction firms being particularly vulnerable to the impact of price increases and project delays.”
Carly Thorpe, construction and engineering partner at law firm Walker Morris, said that the figures demonstrated the “continued pressures” that the sector faced, including “[r]ising costs, delayed project approvals, labour market uncertainty and questions around future demand."
According to Thorpe, these headwinds are contributing to a slowdown in activity, while putting pressure on cashflow and ultimately making it more challenging for many companies to remain financially resilient.
Thorpe continued: “Some businesses are restructuring and divesting underperforming areas to protect core operations and preserve value. As it stands, focusing on profitable and established markets may prove more sustainable than pursuing rapid expansion.”
S&W Restructuring Partner Mark Supperstone, meanwhile, identified delivery, rather than opportunity, as being a key challenge for the sector.
He stated: “The firms we are advising are not without work, however they are struggling to convert their pipelines into cash due to delayed investment decisions, planning hurdles and wider economic uncertainty.”
“Supply chain conditions have improved from the disruption seen earlier in the year, but uncertainty continues to weigh on investment decisions and the sector remains highly sensitive to changes in energy, transport and financing costs.”
“Government initiatives aimed at boosting housing delivery and speeding up infrastructure development are welcome, but many firms are still waiting to see those ambitions translate into meaningful activity on the ground.”
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