67 Grosvenor St | Mayfair | London W1K 3JN | T: 020 7769 6831

Construction Industry Woes as Inflation Spike Sees Sector Remain at Forefront of UK Insolvencies


Construction Industry Woes as Inflation Spike Sees Sector Remain at Forefront of UK Insolvencies

The UK construction industry is grappling with a profound crisis as a surge in inflation continues to wreak havoc on the industry, pushing it to the forefront of insolvencies across the nation. In the 12 months leading up to March 2023, 4,165 construction firms became insolvent, making up 19% of all known insolvency cases by industry. Amid soaring costs of materials and labour, construction firms are facing unprecedented challenges that threaten their very survival.

The construction industry, known for its vital role in the UK economy, has been under significant strain in recent months, and the latest inflation spike has only exacerbated the situation. With the cost of essential building materials like steel, concrete, and lumber experiencing double-digit increases, profit margins have been squeezed, putting immense pressure on companies of all sizes.

Experts point out that the combination of supply chain disruptions, global economic uncertainties, and inflationary pressures has created a perfect storm for construction businesses. As the sector is a major employer in the country, any significant downturn in construction could have far-reaching effects on the overall economy, including potential job losses and reduced investments in infrastructure projects.

Construction firms are now facing a tough balancing act, attempting to deliver projects while grappling with substantial cost overruns. Many companies are unable to pass these increased expenses onto their clients due to contractual commitments, leading to shrinking profits or even losses on projects they had previously estimated would be lucrative.

Industry insiders have expressed particular concern for the sustainability of smaller construction companies, who are especially vulnerable in the current climate. Cash flow constraints and limited access to credit further exacerbate their precarious position, raising fears of a continued wave of insolvencies.

Trade associations are urgently calling on the government to intervene and provide targeted support to the construction industry. Suggestions include financial aid packages, easing of regulatory burdens, and initiatives to support apprenticeships and workforce development.

In response to the crisis, the government has indicated its commitment to assisting the sector, acknowledging the challenges faced by the construction industry and promising to explore measures to alleviate the burden of inflation on businesses.

Despite the gloomy outlook, some experts believe that, if inflationary pressures ease and the supply chain stabilises, the construction industry can still rebound. However, the timeline for such a recovery remains uncertain and, until then, companies in the sector will have to continue to navigate treacherous waters.


Seeking Advice from a Business Recovery Specialist


As inflation continues to surge, the construction industry remains at the forefront of UK insolvencies, grappling with mounting costs and uncertainties. The sector’s fate will undoubtedly have profound implications for the overall economic health of the nation in the months ahead.

If your construction business has been affected by the issues raised in this article, you can get in touch with Voscap today on 020 7769 6831, or email help@voscap.co.uk, to discuss your options with one of our expert business recovery specialists.

About Voscap Ltd

Voscap’s primary objective is to save your business! Our team of experts’ knowledge in restructuring and turnaround assignments is invaluable when assessing the best option available to your needs. With experience spanning several decades, we have the skill and resources to provide viable solutions within all industry sectors. All organisations go through difficult times and we are here to help. From small to multi-million turnover businesses, we have dealt with the most complex of cases. We offer an initial free assessment in analysing your financial position and providing clear and precise advice making your experience a simple non-complicated process. Get in touch →

Recent Articles

Subscribe to our newsletter

Don't miss new updates on your email

All organisations go through difficult times

At Voscap we are here to help – always confidentially