Construction sector has UK economy's highest insolvency rate

Building materials firms had the highest rate of insolvency of UK businesses in June 2011, data published on Monday has shown.

The insolvency index published by information firm Experian found that ten building materials companies - 0.27% of the sector - went bust in June 2011 compared with none the same month a year earlier.

Insolvencies among building and construction firms fell by 9.48% between June 2011 and June 2010. But the sector still had the second highest failure rate of UK businesses in June 2011 with 0.18 % (296 companies) going bust.

The figures showed a north-south divide with 0.10% to 0.13% of business going bust in the northern regions, Scotland and Wales in June 2011 while 0.7% to 0.9% failed in the Midlands and the South.

Firms with 26 to 50 staff were the most likely to go bust in June 2011 while those with either one to two or 101 to 500 employees were the least likely to do so.

Max Firth, managing director for business information services at Experian, said: “June’s data indicates that the UK’s business community as a whole is generally stable, however it also points to a change in circumstances for different sized businesses.

“The largest companies have experienced a turnaround in fortunes and now the larger mid-sized businesses are following suit with a significant improvement since last year. Our analysis also shows that businesses in the North seem to be faring slightly worse than their southern counterparts.”