Out of around 1,181 businesses that went bust last year, 126 were active in construction, up by 13.5% compared to the year before, when 111 firms in construction were declared bankrupt.

But the rise doesn’t spell trouble in the sector, said Fayot (LSAP) in answer to a parliamentary question. The number of construction sector companies also increased between both years, from 4,036 to 4,430, the minister said. This means that the rate of bankruptcies in the sector remained stable at 2.8%.

“The reasons for the bankruptcies are largely the same as was the case before the covid crisis,” Fayot said. “The main reason of the insolvencies remains that of bad management.”

Except for the construction halt during lockdown in 2020, the construction sector and affiliated trades and crafts were resilient during the crisis, Fayot said. Financial difficulties were mostly due to lack of available staff rather than a lack of work.

There is no data that tracks in more detail why a company went bust, the minister said, adding that raw materials shortages caused by supply chain issues contributed only marginally to the bankruptcies in the sector.

“The development of the overall number of companies in the construction sector doesn’t allow to perceive that the competition situation has worsened,” Fayot said.

Companies can also disappear because of mergers with other businesses in the industry, the economy minister added. A mechanism to review consolidation in different areas of the economy is currently under review.