Insolvencies in the construction sector climbed by 19% to 948 in the first three months of the year from 796 in the fourth quarter of last year, according to the accountancy firm Wilkins Kennedy.

It is the first quarterly rise in insolvencies in two years.

The latest figures have been seized upon as a sign of a worsening economy, but could also be an indicator of the beginning of an upturn, when contractors are vulnerable to rising costs.

The figures show that the number of construction companies going bust had fallen steadily every quarter since the 1,209 insolvencies at the start of 2009, when Britain was mired in recession.

“The government has slashed capital spending on infrastructure across the board in order to plug the deficit and that has pushed the construction sector into a double dip,” said Anthony Cork, director at Wilkins Kennedy.

“The question now is how quickly private sector construction work will be able to pick up the slack left by the public sector. So far this has not happened,” he added.