Retail, construction insolvencies surge with war in Ukraine set to worsen UK supply chain problems

Data released today by the Insolvency Service show that insolvencies of retailers and construction businesses have surged in the past year as the UK’s supply chain problems continue to worsen, says Mazars, the international audit, tax and advisory firm.

In the past 12 months, insolvencies of UK retailers have risen 21% from 827 in 2020/21 to 997 in 2021/22*. Over the same period, insolvencies of UK construction businesses have increased 45% from 1,920 to 2,775.

Problems created in supply chains by the war in Ukraine are likely to further exacerbate issues for the construction sector over the coming weeks. The surge in gas and oil prices, also caused by the crisis, is expected to dent consumer spending in the retail sector.

Rebecca Dacre, Partner in the restructuring team at Mazars says: “Raw material costs for construction businesses have become a very significant problem over the last two years and the war in Ukraine has only worsened it. That’s driving more and more construction businesses into insolvency.

“A long line of issues have disrupted supply chains for UK businesses, from Brexit to Covid to a shortage of workers. Those issues have hit construction and retail particularly hard.

“The predictions of a rise in insolvencies in the retail sector are now beginning to come true. Pressures have been rising for months and the dam now seems to be breaking. Retailers have faced a wide range of rising costs – staffing, energy, wholesale prices – just as Government support for businesses has been switched off. Some of them haven’t been able to survive that.”

* Year end 31 January 2022