Auditing firm Mazars said the sector has experienced the highest number of bankruptcies of any industry in the UK for the past three years.

In the year to the end of November, 4,370 companies went insolvent compared to 4,086 in 2021/22 and 2,481 in 2020/21.

This reflected a 7% increase in insolvencies from 2021-22 and 76% in 2020-21 due to high material and labour costs.

The auditing company said the increasing costs of borrowing have affected the profit margins of ongoing and upcoming development projects.

The warning comes after north-east housebuilder Stewart Milne Group fell into administration with the loss of 217 jobs.

Mark Boughey, a partner at Mazars, said: “There are now on average a dozen building companies going under every single day in the UK.

“One problem is that the commercial viability of a lot of today’s projects was assessed three or four years ago, with fixed price contracts often being negotiated. Since then, costs have spiralled, while buyers’ appetite has taken a dive.

“Construction contractors operate on very tight margins at the best of times – the sector is really being squeezed at both ends.”

Bankruptcies were mainly caused by specialised activities such as demolition, electrical and plumbing – which accounted for 58% of all bankruptcies.