Insolvencies Rise Month-on-Month but Show Signs of Stabilising: February 2026 Update

Published on 18^th March 2026

Construction remains most exposed as insolvency levels ease compared to last year

Overview

The latest figures from the Insolvency Service paint a mixed picture for businesses across England and Wales.

There were 1,878 company insolvencies in February 2026, up 7% on January (1,749) but 7% lower than February 2025 (2,015).

While insolvencies have ticked up slightly month-on-month, the broader trend is more encouraging. Levels at the end of 2025 and into early 2026 are lower than those typically seen between 2022 and 2025, suggesting some easing in pressure, even if challenges remain, particularly in construction.

Headline figures at a glance

• 1,878 company insolvencies were recorded in February 2026
  
• Including 249 compulsory liquidations, 1,473 creditors’ voluntary liquidations (CVLs), 146 administrations, and 10 CVAs
  
• One in 194 companies entered insolvency in the 12 months to February 2026
  
• Equivalent to a rate of 51.5 per 10,000 companies, down from 52.3 per 10,000 a year earlier
  
• Construction remains the most affected sector, accounting for 17% of all insolvencies
  

Construction: still under pressure

Construction continues to see the highest number of insolvencies, with 3,912 cases in the 12 months to January 2026, around 17% of all industry cases.

While overall numbers are beginning to stabilise, the reality on the ground remains challenging. Tight margins, rising costs and ongoing payment delays are still putting pressure on businesses across the sector, particularly subcontractors and SMEs. Where projects rely on multiple parties, delays or disruption in one part of the chain can quickly impact cash flow elsewhere.

Even with some improvement in the wider data, cash flow remains the key pressure point for many construction firms.

What’s driving the trends?

Looking a little closer at the data, a few key themes stand out:

• CVLs (78% of all insolvencies) have increased month-on-month, but remain slightly below last year’s levels
  
• Compulsory liquidations are down significantly year-on-year, suggesting fewer creditor-led enforcement actions
  
• Administrations have risen compared to last year, which may indicate more businesses seeking breathing space while they restructure
  
• Overall insolvency levels over the past four months are around 10% lower than the 2022–2025 average
  

Taken together, these points point to a market that’s still under pressure, but beginning to show signs of greater stability.

A longer-term view

The 12-month rolling insolvency rate now stands at 51.5 per 10,000 companies, down slightly from 52.3 a year ago.

While this is higher than the unusually low levels seen during 2020–2021, it remains well below the peak during the 2008–09 recession (113.1 per 10,000).

With more companies operating in the UK than ever before, even a lower rate still translates into a significant number of business failures in real terms, particularly in sectors like construction.

What this means for construction businesses

Although there are signs of improvement, the trading environment remains unpredictable. For construction firms, the risks linked to late payment and customer failure are still very real.

In this climate, taking a proactive approach can make all the difference:

• Keep credit checks up to date to spot early warning signs
  
• Watch payment behaviour closely; small changes can signal bigger issues
  
• Act early on overdue accounts to protect cash flow
  
• Review exposure across your customer base, especially on larger projects
  
• Maintain open conversations with customers where possible
  

Our view

While insolvency levels have eased compared to last year, the construction sector is still feeling the effects of sustained financial pressure.

From what we’re seeing across the construction sector day-to-day, the businesses best placed to navigate this period are those taking early, informed action, staying close to their customers and responding quickly when risks emerge.

Strong credit management and effective debt recovery aren’t just back-office functions; they play a key role in protecting cash flow, maintaining stability, and keeping projects moving.

How can we help

If you’re noticing changes in customer payment behaviour or want greater visibility over your risk exposure, our specialist construction credit and debt recovery team can support you.

From real-time credit insights to proactive recovery strategies, we help you stay in control, reduce risk, and protect your cash flow,  even in challenging conditions.