Red Flag Alert sounds alarm on soaring construction insolvencies amid volatile economy

LONDON, Dec. 4, 2025 /PRNewswire/ -- Red Flag Alert, a leading provider of risk intelligence and insolvency data, today released new insights revealing increasing insolvency risks that construction sector professionals must heed. The latest data reflects an escalating trend in insolvencies, underscoring a challenging economic environment for construction firms and their partners.

Over the last six years, monthly insolvency rates have shown significant volatility, with an average monthly insolvency figure of approximately 2,291 cases, and a standard deviation of 478, demonstrating unpredictable fluctuations. Particularly concerning for the construction sector, insolvency numbers have ranged from a low of 1,617 in June 2022 to a striking peak of 3,531 projected for December 2027. The trend is corroborated by the 6-month moving average, which has risen sharply from a low of 1,787 to a high of 3,212, reflecting sustained economic pressures rather than isolated instances.

The data highlights a particularly sharp upward trajectory in insolvencies within the construction industry during the last 12 months of the dataset. Insolvencies increased consistently from 2,797 in January 2027 to a record 3,531 in December 2027. This indicates ongoing strain in an industry already navigating supply chain disruptions, labour shortages, and regulatory complexities.

Red Flag Alert urges senior construction professionals, risk managers, and business leaders to take proactive steps. This data-driven alert points to a higher probability of encountering distressed or at-risk entities among prospective clients, suppliers, and contractors. As insolvency risks escalate, adopting a vigilant stance will be vital to maintaining financial resilience and operational continuity.

Red Flag Alert's comprehensive insolvency monitoring empowers construction and risk professionals with forward-looking insights, enabling smarter decision-making in an evolving landscape.

Mark Halstead, Founder at Red Flag Alert, said:

The construction sector feels every bump in the economic road, so the latest insolvency numbers are a real wake–up call for everyone from main contractors to specialist trades. What looks like a full order book today can very quickly turn into cancelled projects, unpaid applications, and a domino effect of bad debt if one link in the chain fails.

That is why this is the moment to double down on practical risk controls. That's not just a quick Companies House check, but genuine, data–driven due diligence on customers, subcontractors, and suppliers before a contract is signed. Firms that put tighter compliance checks and more rigorous onboarding at the heart of their processes gain early visibility of financial stress, fraud risk, and trading red flags, so they can adjust terms, secure guarantees, or walk away before problems land on their balance sheet.

By combining these steps with ongoing monitoring throughout the life of a project, construction businesses give themselves the best chance of protecting cash flow, keeping sites moving, and safeguarding the long–term partnerships they rely on to deliver work safely and profitably.

To find out more visit www.redflagalert.com/pr

Contact:

Sinead Haycox, 
Senior Content Manager
Sinead.haycox@redflagalert.com
07375 706064