Overtrading risk looms for construction amid housing and infrastructure drive
In June 2025, the number of registered company insolvencies in England and Wales was 2,043, 8% lower than in May 2025 (2,230), and 16% lower than June 2024 (2,430).
The construction industry experienced the highest number of insolvencies in the 12 months to May 2025 at 4,056, making up 17% of all industry cases.
Commenting on the latest construction insolvency statistics, Kelly Boorman, national head of construction at RSM UK, said: “While overall insolvencies fell in the year to June 2025, the construction industry continued to experience the highest number of insolvencies in May. As such, the government’s latest push to accelerate delivery of housing and infrastructure projects could leave construction businesses in a difficult position. While it’s encouraging to see housebuilding and infrastructure recognised as drivers of economic growth, there’s the risk of businesses falling into an overtrading trap and taking on more work than their supply chains and operational capacity can support. Although pipelines are strong and margins are improving, the supply chain is struggling to keep pace, with labour constraints, rising employment costs and future supply shortages anticipated for materials which will drive prices up adding further tension.
“Mandatory housing targets and expectations to commit to large infrastructure projects could result in businesses being unable to meet demand, despite the government’s commitment to investment, training and pipeline visibility. Main contractors will also feel increased pressure to support the supply chain and mitigate the impact of labour shortages. However, wage growth in construction is outpacing other industries because of labour shortages. As larger players enhance due diligence on their subcontractors’ supply chain to ensure compliance of laws, regulations and sustainability criteria, they are grappling with reliance on a smaller supply chain, with an already limited workforce putting further strain on project delivery and profitability. Inflation also remains a challenge, as many construction businesses are struggling to access affordable debt which is stifling long-term growth plans.”
She added: “But, there is reason for cautious optimism despite labour challenges. With AI and technology likely to displace manual workers from other industries, this could lead to new employment opportunities in construction. Additionally, the launch of the National Housing Bank will provide more stability and access to working capital for SME housebuilders which should help accelerate project delivery and mitigate the risk of overtrading.”