PwC says more construction firms went bust last year than in any other sector

Rok and Connaught were just two of the 565 companies that went bust last year in the construction sector.

Analysis by accountants PwC on insolvencies in the UK economy found construction was the worst affected industry in a year when insolvencies across the whole economy fell sharply, down 19% on 2009.

Other badly affected sectors included manufacturing with 410 insolvencies, retail with 399, hospitality and leisure with 237 and real estate with 131.

Mike Jervis, partner in the business recovery services practice at PwC, said: “The demise of Rok in November 2010 exemplifies that companies within the construction and service industries are still vulnerable.

“It is telling that overall construction insolvencies during 2010 were still 15% above those experienced in 2008. A modest increase in interest rates would also put additional pressure on many struggling companies.

“These actual and potential economic challenges need to be factored into company cashflow forecasts and scenario planning should be a key discipline.

“Key risks are loss of demand or increases in uncontrollable costs. Cashflow management needs to be obsessive in companies facing these issues.”