Carillion’s collapse triggered a 20% spike in the number of UK building firms becoming insolvent, a report says.
A total of 780 companies in the industry ground to a halt in the first quarter of 2018 after the country’s second largest construction firm was forced into liquidation in January.
That is a one-fifth increase over the same period in 2017, according to analysis by accountancy firm Moore Stephens.
Thousands of subcontractors lost contracts as a result of Carillion’s demise, and had racked up sizeable debts under the favoured firm’s punishing payment regimen, Moore Stephens said.
"The collapse of Carillion sent shockwaves through the construction sector, and we are seeing more insolvencies as a direct result," Lee Causer, spokesman for Moore Stephens, told newspaper The Guardian.
"Large construction companies are infamous for squeezing the profit margins of the contractors and subcontractors who work for them. These contractors often cannot negotiate against the terms set for them by their larger clients."
Specialist subcontractors had been left particularly vulnerable.
"Many of them will have relied on the giant for significant amounts of their work," Causer said. "It is also likely that these subcontractors would have had to write off virtually everything owed to them by Carillion."
Image: Thousands of subcontractors lost contracts as a result of Carillion’s demise (Carillion)