A total of 625 construction firms went out of business in the first three months of this year, with failures in the North-east of England rocketing by 27 per cent.
It means there have been 5,500 construction insolvencies in the two-year period since Q2 2011. Of these, 1,488 involved general construction/civil engineering firms and 378 involved architectural firms, according to the latest PwC figures.
There was some positive news as the industry saw a fall in failures in the first quarter of 2013, with construction insolvencies falling 5 per cent compared with the previous quarter. However, 625 companies still folded nationwide, compared with 658 in Q4 2012.
London remains the region with the highest rate of construction businesses folding – mainly due to the relatively high number of firms in the capital (103). Over the two-year period, London has recorded 977 insolvency cases overall.
The North-east and Cumbria region reported a rise in industry insolvencies of 27.5 per cent against Q4 2012, while the North-west was up 14.8 per cent. Most other regions saw a decline in the number of insolvencies.
PwC engineering & construction leader Jonathan Hook said: ”Any reduction in the number of insolvencies in the construction sector is welcome.
“The sector in the UK is still experiencing declining output year on year, however, so we are not necessarily over the worst yet in terms of insolvencies.
“There is an ongoing cash squeeze throughout the supply chain, as has been evidenced in recent reported results.
“The measures in the recent Budget to support infrastructure, and in particular levels of housebuilding, are welcome but will take a little while to feed through into output.”
There have been nearly 9,000 cases of insolvencies in construction and manufacturing combined since Q2 2011, according to the PwC figures.
In Q1 2013 there were 12 per cent fewer insolvencies in manufacturing than the previous quarter: 388 compared with 444 for Q4 2012.
Of the 3,465 manufacturing sector insolvencies since Q2 2011, 958 were industrial manufacturing firms.