The UK construction industry has found itself at the sharp end of economic turbulence in recent years, emerging as one of the sectors most severely affected by insolvencies. A mix of high inflation, soaring interest rates, fluctuating materials, and rigid fixed-price contracts has created relentless pressure across the board.

Since 2022, construction has consistently ranked as the sector with the highest number of business failures in the UK. Each quarter sees hundreds of firms collapse, many of them small to mid-sized operations working on wafer-thin margins. The industry’s fragmented structure, combined with delayed payments and rising operational costs, has made it especially exposed to financial distress.

The latest S&P Global Construction PMI for May offered a glimmer of hope. The index rose to 47.9, up from 46.6 in April and ahead of forecasts at 47.2. This suggested a slight improvement in activity. However, with the figure still below the crucial 50 threshold that marks growth, the data reinforces the sector’s continued struggle. While the modest uptick hints at early signs of stabilisation, it comes too late for many firms already pushed into administration by prolonged financial pressure, weak demand, and tight margins.

At the same time, The number of UK companies entering administration jumped by a third in May compared to April. Our platform tracked more than 25 construction businesses that went under in May, up by more than 20% as compared to April. This also reflected a significant year-on-year increase from 2024. Over the first five months of 2025, construction sector administrations totalled 122, a 5% rise on the 116 recorded during the same period last year.

While May brought positive signals, such as the Bank of England’s base rate cut and a strong Q1 showing for new orders, these came too late for the construction sector. Most small businesses have already been battling weak order books, tight margins, and mounting debt.

The month-on-month rise in administrations reflects deeper structural issues in the sector. With failing orders on commercial buildings, investor confidence has taken a hit. Plus, looming employment reforms, increased taxation and NI contributions are making it harder for small businesses to secure tenders and create new work opportunities. All of this inevitably leads to supply chain issues, which are only being exacerbated. It will not be surprising if we see more business failures in the second half of 2025. For months now,  growth in the sector has remained stagnant, and it clearly affects the outlook for the broader UK economy. The £2.5bn worth of orders placed in Q1 point towards a slight level of resilience, however, till the time these orders are completed, stabilisation remains uncertain. 

Key Target Areas for Distressed Business Buyers

Insolvency isn’t just an end, it’s a reset button. For smart, well-capitalised buyers, the current storm in UK construction is a prime environment to pick up solid businesses with reputational capital, technical skill, and local market presence, at a discount that reflects long-term potential.. Here are some key target areas to focus on: 

1. Look for businesses that failed due to poor cash management or debt overhang, not because of a flawed business model or technical incompetence. These companies can often be turned around quickly with better financial control and supply chain renegotiations.
2. M&E firms, groundwork specialists, cladding installers, and finishing trades are often the first to collapse in a downturn but also among the easiest to reposition in a recovery cycle. These firms are integral to the supply chain but don’t always carry the overheads of main contractors.
3. Partially completed contracts and inherited work-in-progress can be a goldmine especially if the project owners (often public sector or large private clients) are looking for continuity and willing to reassign or renegotiate terms with new operators.
4. A number of local businesses that fail are already pre-qualified for public sector frameworks (e.g., NHS, housing associations, schools). Buying into one of these gives buyers a shortcut into guaranteed tender pipelines that would otherwise take years to establish.

At the same time, it is important to keep track of legacy debt and warranty exposure present significant risks, so asset purchases are generally preferable to share deals unless you’re prepared to take on historic liabilities such as retentions, latent defects, or long-term warranty obligations. Buyers should prioritise companies operating under flexible commercial terms or cost-plus models and secure or hedge procurement pipelines early. 

Insolvency News | Administration Woes for Cladding Specialist EAG

Cladding contractor English Architectural Glazing Ltd. (EAG) has filed a notice of intention to appoint administrators with the High Court, with insolvency specialists Begbies Traynor set to take control of the firm. Its manufacturing division, Multifab Ltd, has also submitted a similar notice.

EAG was one of four façade firms brought together under the Clarison Group in 2021, forming a £100 million turnover business backed by UK private equity firm Elaghmore. However, EAG became a standalone company at the end of 2024 following Clarison’s decline. The group’s disintegration began with sister company Alucraft Ltd, which entered administration in March 2023, owing over £7.7 million to suppliers and subcontractors.

Clarison Group, which also included Williaam Cox and Alucraft Ireland Ltd, officially changed its name to TGCL 2024 Ltd in March 2024 before entering voluntary liquidation in July.

The Company sought new investment, but this process was unsuccessful. As a result, the Board of EAG has applied to the Court for Begbies Traynor to be appointed as administrators. EAG’s latest financial results, for the year ending 31 December 2023, reported turnover of £21.7 million and a pre-tax loss of £290,000, highlighting the financial strain that ultimately led to its collapse.

Insolvency News | Manta Systems Enters Administration

Modular construction firm Elements Europe, based in Telford, has entered administration, resulting in 141 redundancies. Staff were informed of the company’s collapse during a meeting at its Hadley Castle factory on Wednesday, June 4. Of the 217 employees, 76 have been retained to assist administrators Interpath Advisory in maintaining limited operations while the business is assessed for possible rescue or asset sale.

Founded in 2005, Elements Europe specialised in off-site room modules and bathroom pods for the residential, student accommodation, and hotel sectors. It was acquired in 2020 by South Korean construction giant GS Engineering & Construction Corporation, which transitioned the firm from subcontractor to principal contractor on major modular schemes in Birmingham and London in 2021.

However, those two flagship projects, Camp Hill in Birmingham and East Road in London, are now understood to have incurred significant losses. According to the administrators, recent attempts to refinance or sell the business failed, and directors concluded that a solvent solution was no longer viable.

Sam Birchall and Steve Absolom of Interpath were appointed as joint administrators on June 5. In a statement, Birchall said: “Sadly Elements Europe has not been immune to the headwinds facing the construction sector. Our intention is to pause work on the ongoing contracts at East Road and Camp Hill whilst we explore options to rescue all or parts of the business. As a priority, we will be providing support to those employees who have been impacted by redundancy.”

Elements Europe was once promoted as one of the UK’s leading offsite building solution providers and among the country’s largest bathroom pod manufacturers. The administrators are now inviting offers for the company’s assets.