Nearly five times as many construction firms are experiencing 'critical problems' in 2008 compared to last year, according to figures from Begbies Traynor, the UK business rescue specialist.
A total of 639 construction firms are facing 'critical' problems' (CCJs totalling more than £5,000 or Winding-Up petition-related actions) in Q2 of 2008 compared with 136 firms in the same period last year.

The construction sector is one of the worst affected industry sectors, with a 370% rise in the number of firms with critical problems this year.

Begbies Traynor Red Flag A!ert analysis measures corporate distress signals from legal and financial data drawn for incorporated companies that have been trading for over a year, with assets in excess of £10,000.

The research showed conditions getting more difficult as the year progresses, with an increase in the number of construction companies facing critical problems rising by 13% in Q2 2008 compared to Q1 2008.

Construction was only surpassed in the negative statistic stakes by the IT sector, which saw a 371% rise .

Ric Traynor, executive chairman of Begbies Traynor group, said, 'In times of economic slowdown, you would expect the construction and retail sectors to suffer - and that is certainly borne out by our research.

'Credit lines have dried up and companies which might have been supported by extended credit up to a year ago are now at real risk', he added.

Based on previous Begbies Traynor research, Begbies says 15% of the companies experiencing 'critical problems', will enter into a formal insolvency procedure within 12 months.