According to the Insolvency Service, the amount of construction business failures going into administration fell in Q4 2009 by -15.1% (90 companies) compared to Q3 where 106 did.

This was a significant improvement on Q4 2008 which had a peak of 156 failures, which is a drop of -42.3%. Throughout 2009 there were 427 business failures, which is a -8.8% fall in comparison to 2008 which had 468 companies entering administration.

Phil Westerman, head of construction at Grant Thornton, said: "It is always positive to see tangible improvements in the construction sector and it is a big surprise that the figures in Q4 are not worse given the adverse weather conditions experienced in December.”

Despite house prices in Britain showing some signs of recovery and the Governments commitment to boost infrastructure, mortgage providers are still requiring a high level of deposit, from first-time-buyers in particular.

Coupled with the ongoing economic uncertainty and the impact this is having on the pipeline for future work, trading conditions for the construction sector during the first half of 2010 and beyond are expected to remain difficult.

Even though the UK has officially come out of recession, the construction sector often lags behind others in recovering from a downturn so we may therefore see an increase in business failures before things significantly improve."
Westerman also stated that business failures in the construction industry are still relatively high and that it continues to be a major concern for the industry.