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Construction insolvencies see dramatic drop in June

The number of construction firms going bust has fallen by nearly a quarter in June 2013 compared with the same month a year earlier, new figures show.

The data, from credit rating firm Experian, found 278 building and construction firms went into insolvency in June 2012 falling to 213 in June 2013.

Overall 0.12 per cent of construction businesses failed in June 2013 against 0.17 in June 2012.

There was also a slight improvement in insolvencies amongst building materials firms with six firms failing, compared with seven in the same period the year before.

The largest proportion of businesses failing in the economy as a whole had 11 to 25 employees, a bracket where 0.15 per cent of firms failed in June 2013.

Overall every region saw a decrease in the proportion of firms going into insolvency or stayed static apart from London where there was a 0.01 per cent rise to 0.08 per cent.

The insolvency rate for all UK businesses fell to 0.07 per cent in June from 0.08 per cent in June 2012 – the second consecutive monthly fall.

Max Firth, managing director, for Experian Business Information Services, UK & Ireland said: “This is good news overall – we’ve already seen several months of low but level insolvency rates and the fact they have come down further indicates that firms are operating with more confidence than in recent years. 

“However, as businesses start to think about growth and companies start to restock and rehire, the insolvency rate could well go up as cash flow becomes an issue.  This makes it all the more important for SMEs to understand who they are supplying, how quickly they pay, and think about what credit options are open to them in advance.”

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