Construction bankruptcies peak in 2025

Construction bankruptcies are showing sharp increases across the eurozone this year. According to our latest survey, the peak has not yet been reached. That will follow next year. Bad news for Belgian construction is that the increase in our country is of +21%.

The latest figures show an increase (compared to a year ago) of +20% in Germany, +31% in France, +35% in Italy and Sweden but a favorable +4% for the Netherlands. Belgium scores +21%. In September 2024, 306 Belgian construction companies went belly up, and most of them are still breaking even or running at a loss.

According to Johan Geeroms, our Director of Risk Underwriting Benelux, construction is in the top three sectors most affected by major insolvencies. "These are often heavily financed companies that run into delays. For example, because payments are delayed. Or because execution of projects keeps getting delayed."

Our report also explicitly warns of large construction groups that may be vulnerable. In the first half of the year, 30 companies with sales greater than €50 million went bankrupt, particularly in Europe and Asia.

Although we foresee a cautious rebound for the construction industry by 2025, it remains fragile, according to Johan Geeroms. These include tighter government budgets (for housing and infrastructure), the search for qualified personnel (among smaller companies anyway), the problem of an aging population, and more extreme weather conditions.

Johan Geeroms is quietly hopeful that falling interest rates may provide a boost. Among other things, our report brings the financial picture of the construction sector into focus. This shows, among other things, that European construction companies have a high debt ratio which gives them an extra vulnerability.  Belgium is in the red zone with a net gearing of 67%. 

In conclusion, Johan Geeroms says that lower interest rates and also slightly lower material costs are bringing some relief to the construction industry. On the other hand, rising labor costs, slowing regulations and the minimal margins. This, according to Johan Geeroms, demands maximum vigilance from anyone doing business in the construction industry. "Bankruptcies are lurking everywhere. You don't want to experience a situation where your company has delivered and then a large invoice is not paid because your customer has gone under."