Begbies Traynor’s latest Construction Red Flag Alert found ‘critical’ distress in the construction sector jumped 70.2% year-on-year (YoY) in Q3 2025, hitting 7,361 firms.
The number of construction companies in ‘significant’ distress rose to 103,551, up 14.6% from last year.
The worst affected areas over the past year were specialised design activities, up 23.5%, development of building projects up 23.17%, plumbing, heat and air-conditioning installation up 17%, electrical installation up 16.1% and construction of domestic buildings up 9.9%.
Quarterly figures showed ‘significant’ distress dropped from Q2 to Q3 2025 for plumbing, heat and air-conditioning installation (down 4.3% from 7,282), electrical installation (down 4.3% from 7,574) and construction of domestic buildings (down 4.5% from 12,295).
Across the UK, 726,594 businesses reported significant financial distress in Q3 2025, a 14.8% increase on last year, while the number of businesses in ‘critical’ distress rose 78% year-on-year to 55,530.
Julie Palmer, partner at Begbies Traynor, said: “Despite a cloudy haze covering the housebuilding and construction sector, Barratt Redrow is yet again delivering shafts of sunlight through the gloom.
“The question smaller companies in the industry will be asking is whether they can win connected work to bask in and benefit from the glow.
“Barratt Redrow’s own performance highlights polarisation in the market between large national housebuilders and developers and SMEs, who may not have the headroom to soak up rising costs.”
Palmer added: “This polarisation may be compounded if unpaid taxes are called in, potentially seeing firms requiring restructuring, refinance, negotiating Time to Pay agreements or an exit.
“These results are positive news for the industry but as one of the highflyers in the market, Barratt Redrow has been able to cope with market challenges and poke holes in the clouds.
“For those within its supply chain and the wider industry, growth and stability is not guaranteed and they will be wondering how they can benefit.”
She said: “Housebuilders like Barratt Redrow will need a healthy balance in the industry of small, medium and large companies if they are to be supported in reaching the ambitious housing targets set and deliver jobs, ideas, productivity and growth.”
