New figures from the UK’s Insolvency Service point to rising financial distress among small and medium-sized construction companies due to heightened geopolitical tensions in the Middle East.
Citing government figures, RSM UK said 592 smaller construction businesses became insolvent in the three months to May.
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The figure represents the highest quarterly figure since May 2025, when 594 were recorded.
These companies, broadly classed as carrying out specialised construction activities, now account for around 60% of all construction insolvencies.
RSM UK Restructuring Advisory partner James Hawksworth said: “Today’s figures show yet again the vulnerability of the construction sector to global geopolitical events.
“More critically though, it is the smaller more specialised companies with the least financial resilience that appear to be suffering the most.
“The uptick in insolvencies over the past three months in this specific area of the market makes it increasingly clear that those entities lower in the supply chain will feel the most pain.”
Over the 12 months to May 2026, the construction industry recorded 3,803 insolvencies, the highest total of any sector and 17% of all business failures across the economy.
Hawksworth added: “The latest insolvency data for the sector follows the trend set in the first quarter of 2026 [Q1 2026] for numbers of winding up petitions filed by trade creditors in the sector.
“The number of filings in Q1 2026 represented the highest number of winding up petitions issued by trade creditors since the financial crisis – a further indicator of the major underlying pressures and structural challenges in the sector.
“Whilst tensions in the Middle East appear to have lessened as a result of the Iran-US accord this week, the medium-term consequences of the past three months will continue to have a negative impact until a greater degree of certainty is reached.
“In the meantime, businesses will continue to contend with heightened cost pressures, reduced investor appetite and uncertain economic conditions, with no clear indication of when current headwinds will ease.”
